We have seen the law of increasing opportunity cost at work traveling from point A toward point D on the production possibilities curve in Figure 2.5 “The Combined Production Possibilities Curve for Alpine Sports”. Not coincidentally, the average slope of the PPF over this region is (190-200)/(100-0) = -10/100, or -1/10. The PPF assumes that all inputs are used efficiently. The points in between L and M represent all the possible combinations of agricultural and manufactured goods that are currently possible. But the direction that PPF is curved comes from the way that the trade-offs change. For example, production could take place at point D, with 9 million units of food and 3 million units of cloth being produced. The answer is a.) Production-Possibilities Curve/Frontier: The Production-Possibilities Curve/Frontier describes the concept of opportunity cost at several levels. But since they are scarce, a choice has to be made between the alternative goods that can be produced. The Data of Macroeconomics. Imagine an economy that can produce only two things: wheat and steal. Mcq Added by: Adden wafa. A point inside the production possibilities frontier is. A point at which an economy is using all resources most productively. If any of these factors change, than the PPF will change as well. a. efficient but not feasible. It represents something to be achieved in the future when more technology or labor are available. Q: FC VC TC AFC AVC ATC MC 2. Because if we draw a line-- I just arbitrarily picked these scenarios. A production possibility frontier (PPF) shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed If we increase our output of consumer goods (i.e. 1. The slope of the production possibilities frontier represents the magnitude of this tradeoff.For example, in moving from the top left point to the next point down the curve, the economy has to give up production of 10 guns if it wants to produce 100 more pounds of butter. Correct answers: 3 question: A point on a production possibility frontier represents? In our example, while we would love to produce 50 pineapples and 50 crabs, this is out of our realm of possible production. ... What does a point inside the production possibility frontier represent? 2) Explain how the production possibilities frontier illustrates scarcity. A production possibilities frontier shows the possible combinations of goods and services that a society can produce with its limited resources. The idea of increasing opportunity cost is reflected in the. Production points inside the curve show an economy is not producing at its comparative advantage. Points Inside. What does a point inside the production possibility frontier represent? Therefore, a point outside of the production possibility frontier (such as J) is currently impossible – there are simply not enough resources. Application of Economics Application of Economics Economics Mcqs. Represents an inefficient out-come. It represents the maximum combination of goods that can be produced given available resources and technology. It is a graphical representation of two products or services which are dependent on the same finite inputs for the production process. Label it point C. There are many possible answers here, but point A should be drawn outside of the production possibility frontier, point B should be on the production possibility frontier, and point C should be inside the production possibility frontier. Depending on the technology, the PPF will have a certain shape. When the economy is producing at such a point, say point A, there is no way to produce more of one good without producing less of the other. 2. The Aggregate Demand/Aggregate Supply Model. When the economy is producing at such a point, there is no way to produce more of one good without producing less of the other. A Production Possibility Frontier (PPF) is the graphical representation of Figure 2.2a. Find a point that represents inefficient production. B. D. appointment which the economy is … A point beneath the curve indicates inefficiency, and a point beyond the curve indicates impossibility. A point inside a production possibilities curve represents things that can be produced. Production cannot take place beyond the curve. A. an advance in technology B. an increase in the labor force C. an increase in the capital stock D. a reduction in unemployment. At one extreme, at a choice like P, a country would be selecting a high level of economic output but very little environmental protection. C. a tradeoff. It shows businesses and national economies the optimal production levels of two distinct capital goods competing for the same resources in production, and the opportunity cost associated with either decision. D)any point on either the horizontal or the vertical axis. c. is something outside the PPF. The productive resources of the community can be used for the production of various alternative goods. It forms a shape that looks like a cave or a rainbow. Points On (rather than inside) the production possibilities frontier represent efficient levels of production. The Real Economy in the Long Run. Give the gift of Numerade. Similarly, the society could allocate all of its resources to producing education, and none to producing healthcare, as shown at point F. 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