– Points on the frontier are efficient. In fact B B) marks the boundary between attainable combinations of goods and services and unattainable combinations. Points inside (below)the production possibilities frontier (PPF)are A) unattainable. B) attainable and productive inefficient. Production Possibility Frontier (PPF or PPC) PPF is the curve that shows the best (maximum) combinations of two outputs that an economy can produce given three assumptions: 1) Technology is fixed; 2) Resources are fixed; and 3) Resources are used at their fullest. Minimum-wage laws cause unemployment. Attainable and Unattainable Production Possibilities frontier 3,000 C B Quantity of Computers Produced A 0 03/03/14 Quantity of Cars Produced All points on or inside the frontier are attainable Point A is attainable, so is point B. When he asked his economists for advice, they always answered... "On the one hand,.... On the other hand,....". Macroeconomists study the forces and trends that affect the economy as a whole. c. both efficient and feasible. C. unattainable Points on (rather than inside) the production possibilities frontier represent efficient levels of production, The Production Possibilities Frontier: trade offs. Therefore, both inefficient output combinations and efficient output combinations are feasible, but not all feasible points are efficient. This is due to the basic fact that the economys resources are limited. a curve that shows the maximum quantity of one good that can be produced for each possible quantity The Production Possibilities Frontier- inefficient outcome. Therefore, both inefficient output combinations and efficient output combinations are feasible, but not all feasible points are Your email address will not be published. Microeconomics is the study of how households and firms make decisions and how they interact in specific markets. (cars, toys, computers), The Production Possibilities Frontier- efficient outcome, An outcome is said to be efficient if the economy is getting all it can from the scarce resources it has available. e. We should strive to push the PPF outward. It looks like your browser needs an update. Within business analysis , the production possibility curve represents the various production levels of two goods requiring one resource that is available in a limited amount. C) on the production possibilities frontier between points C and D. Answer: Diff: 2 Type: MC Topic: Production Possibilities and Opportunity Cost Use the table below to answer the following questions. b. feasible but not efficient. IF YOU THINK THAT ABOVE POSTED MCQ IS WRONG. Production Possibilities and Opportunity Cost 1. When an economy produces a combination of goods that lies on the production possibilities frontier: A. resources are being used fully and efficiently. Inefficient outcome- are those inside of the graph. d. neither efficient nor c. Points on the production possibilities frontier (PPF) are efficient. But the direction that PPF is curved comes from the way that the 2.1 Define the production possibilities frontier and use it to calculate opportunity cost Every working day, in mines, factories, shops, and offices and on farms and construction sites across the United States, 153 million people produce a vast variety of goods and services valued at $70 billion. If every trade-off were the same, it would create a straight line. Points located on or inside the production possibilities frontier represent feasible output combinations. The government is made of lots of economist. Trade Regulations And D. efficient. • Production Efficiency – We achieve production efficiency if we cannot produce more of one good without producing less of some other good. Points along a production possibilities frontier are attainable … Positive statements are descriptive. President Harry Truman once said that he wanted to find a one-armed economist. 1. B. normative © Copyright 2016-2020 - www.PakMcqs.com/. C) preferable to points that lie on the PPF. A. inefficient households are buyers and firms are sellers, Where firms are buyers and households are sellers. Balance of Payments, Aid and Foreign Investment, Characteristics and Institutions of Developing Countries, Exchange-Rate Systems And Currency Crises. JEL Classifications: A20, A22 Keywords production possibilities frontier, trade-offs between leisure and goods and On the production possibilities frontier shown the opportunity cost to the economy of getting 10 additional roller blades by moving from (adsbygoogle = window.adsbygoogle || []).push({}); PakMcqs.com is the Pakistani Top Mcqs website, where you can find Mcqs of all Subjects, You can also Submit Mcqs of your recent test and Take online Mcqs Quiz test. The outer set of arrows shows the flow of dollars. A microeconomist might study the effects of rent control on housing in New York City, the impact of foreign competition on the U.S. auto industry, or the effects of compulsory school attendance on workers' earnings. The production possibilities frontier shows one trade-off that society faces. Economics Mcqs for Lecturer & Subject Specialist Exams. such as labor, land, and capital (buildings and machines). 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