Production Possibility Curve Quiz

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Questions and Answers

What does a point outside the Production Possibility Curve (PPC) indicate?

  • The economy has achieved maximum efficiency with current resources
  • The economy has reduced its resource usage
  • The economy has acquired more resources or improved technology (correct)
  • The economy has become less productive

What does a point on the Production Possibility Curve (PPC) represent?

  • Inefficient use of resources
  • A situation where one good is produced, but not the other
  • An unattainable production level with current resources
  • Full employment and efficient use of resources (correct)

What does an inefficient use of resources on the PPC indicate?

  • Production levels are unachievable with current resources
  • Resources are allocated inefficiently (correct)
  • The economy has improved technology
  • The economy is maximizing potential production

Which scenario best illustrates a shift to a point outside the PPC?

<p>Technological advancements increase the economy's production capacity (D)</p> Signup and view all the answers

Which statement is true about an inefficient production point?

<p>It cannot achieve maximum production of at least one good (C)</p> Signup and view all the answers

What best describes the core reason for the existence of scarcity?

<p>Wants exceed the resources available to satisfy them. (B)</p> Signup and view all the answers

Which definition accurately encapsulates what economics studies?

<p>The choices made to cope with scarcity, how incentives influence those choices, and how they are coordinated. (C)</p> Signup and view all the answers

Identify the example that corresponds to a how question within the three big economic questions.

<p>Why do we prefer automated processes over manual labor in agriculture? (C)</p> Signup and view all the answers

Which idea does not align with the economic way of thinking?

<p>Economic disparity necessitates systemic change. (D)</p> Signup and view all the answers

What constitutes a rational choice in an economic context?

<p>The optimal decision made by comparing marginal benefit and marginal cost. (D)</p> Signup and view all the answers

Which scenario is classified as a microeconomic topic?

<p>Production levels of motor vehicles in China. (A)</p> Signup and view all the answers

Select the statement that exemplifies a macroeconomic issue.

<p>A national increase in consumer spending. (D)</p> Signup and view all the answers

What does a point inside the Production Possibility Curve (PPC) indicate?

<p>Resources are underutilized or misallocated. (C)</p> Signup and view all the answers

Flashcards

PPC Point on Curve

Represents maximum output achievable with current resources and technology.

PPC Point Outside Curve

Shows production beyond current potential, indicating more resources or better tech.

Inefficient Resource Use

Producing less than maximum output possible with given resources.

Unachievable Production Levels

Beyond a given economy's current resources & tech.

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Maximum Production

The highest possible output of two goods using all existing resources efficiently.

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Scarcity

The fundamental economic problem of having unlimited wants but limited resources.

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Economics

The social science that studies how people make choices to cope with scarcity, how incentives influence those choices, and how choices are coordinated.

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How question (Economics)

A question about the methods or techniques used to produce goods and services.

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Rational Choice

A choice made by comparing marginal benefits and marginal costs.

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Microeconomics

The study of individual economic agents and markets.

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Macroeconomics

The study of the overall economy, including topics like inflation, unemployment, and economic growth.

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Production Possibilities Curve (PPC) point inside

Represents an underutilized economy, where resources are not being fully employed.

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Marginal cost vs. Marginal benefit

Rational actors weigh the additional cost of a choice with the additional benefits of the choice.

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