C. inefficiency. This is a trick question because an economy cannot produce at a point inside the curve. Label the Axes . This situation is caused by the specialization of workers. If there are idle or inefficiently allocated factors of production, the economy will operate inside the production possibilities curve. because both commodities can be increased without incurring an opportunity cost . Production Possibilities. A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. d. the curve will begin to shift outward. Clearly, such points cannot be production efficient. A point outside a production possibilities curve reflects unemployment e. an impossible choice 2. Which of the following is true? b) it is producing beyond its production possibilities. So U.S is operating efficiently. Investment, entrepreneurial ability, and full employment O Land, labor capital and entrepreneurial ability 0 Full employment, fixed supplies of resources, fixed technology, and two goods Land, full employment, fixed technology. Instructions: Use the tool provided 'PPC' to plot the production possibility curve. d.) Implies that too much labor and not enough capital is being used. In a recession, unemployed workers are not producing goods and services, so the economy is not producing its long run potential. a. its resources are not being used efficiently. The PPC shows the combination of goods and/or services that can be produced with the available shared resources. Production-Possibility Frontier delineates the maximum amount/quantities of outputs (goods/services) an economy can achieve, given fixed resources (factors of production) and fixed technological progress.Points that lie either on or below the production possibilities frontier/curve are possible/attainable: the quantities can be produced with currently available resources and technology. Points inside the production possibility curve indicates that the society concerned is not making full and efficient use of its resources and consequently fewer needs and wants are satisfied than is possible. Concepts covered include efficiency, inefficiency, economic growth and contraction, and recession. Any point on the frontier (line/curve) is attainable, any point inside the frontier is attainable, ad any point outside the frontier is unattainable. In this video, Sal explains how the production possibilities curve model can be used to illustrate changes in a country's actual and potential level of output. Therefore, any point inside the production possibility curve indicates under utilization of resources because the economy can produce more with the given resources and any point beyond the production possibility curve cannot be achieved because the economy does not have the required resources to produce such amount of ouput. Which characteristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length? In macroeconomics, points inside the curve are used to illustrate a recession. E) a way to increase future economic growth. Points on the production possibilities curve thus satisfy two conditions: the economy is making full use of its factors of production, and it is making efficient use of its factors of production. A point outside a production possibilities curve reflects: A. efficiency. Draw a production possibility curve that reflects this trade-off. However, any choice inside the production possibilities frontier is productively inefficient and wasteful because it is possible to produce more of one good, the other good, or some combination of both goods. It is also known as transformation curve. Upon what specific assumptions is this production possibilities curve based? Choices a.) In fact B is better! 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. Here is a guide to graphing a PPF and how to analyze it. inefficiently. Could indicate that resources are misallocated. If it would be inside the production possibility frontier (PPF), it would reflect too many crops and not enough lawns. So if a firm is operating inside the production possibility curve, then it indicates that the firm is not utilizing the supplied resources and technology efficiently. Point C is unattainable 1,000 4 5. b. possibilities curve. a. If an economy is producing at a point inside its PPF: a) it is producing efficiently. The production possibilities frontier (PPF for short, also referred to as production possibilities curve) is a simple way to show these production tradeoffs graphically. When an economy is in a recession, it is operating inside the PPC. Production Possibilities Curve. C) is more efficient than a point on the production possibilities frontier. This preview shows page 7 - 10 out of 31 pages.. 31. A point beneath the curve indicates inefficiency, and a point beyond the curve indicates impossibility. increasing opportunity cost when substituting one type of production for another. Points inside a production possibilities curve are _____ and _____. 3) A point inside a production possibilities frontier A) reflects the fact that more technology needs to be developed to fully employ all resources. B) implies that too much labor and not enough capital is being used. When it is at full employment, it operates on the PPC. Group of people with common desires c. Place where only sellers meet d. Place where only buyers come together 19. Since the given nation has excessive population growth and unskilled labor, the production possibilities curve tends to. How does the production possibilities frontier show that every choice involves a tradeoff? Any point inside the frontier reflects production where one or both outputs may be increased without decreasing the other output level. Shift to a point on the graph, which reflects growth. D. unemployment. 01. of 09. 3. If a point falls inside the production possibility curve it means either the resources are under utilised or there is unemployment in the economy. O movement toward the curve from a point inside the curve. production possibilities frontier reflects the . … Is more efficient than a point on the production possibilities frontier. After all, the curve tells us that if Tom catches 20 fish, he could also gather a maximum of 15 coconuts, so he could certainly gather 9 coconuts. A market is a a. Points closer to the curve in the attainable area are more "Efficient", which means that more resourves are being used, and more people are being employed. B) technological innovation. Production Possibility Curve (PPC) is the graphical representation of the possible combinations of two goods that can be produced with given resources and level of technology. D) economic efficiency. Question: SECTION A [20 MARKS] 1. If society initially favours car production over airplanes so that we are located in the southeast portion of the frontier, workers become skilled in car production. Group of demanders and suppliers of a particular good or service b. O outward shift of the entire curve. If you're seeing this message, it means we're having trouble loading external resources on our website. Point C reflects an economy using its resources . If An Economy Is Operating At A Point Inside The Production Possibilities Curve (a) Its Resources Are Being Wasted (b) The Curve Will Begin To Shift Inward (c) The Curve Will Begin To Shift Outward’ (d) This Is A Trick Question Because An Economy Cannot Produce At A Point Inside The Curve. Since the choice is to be made between infinite possibilities, economists assume that there are only two goods being produced. Any point of production inside the curve is considered inefficient because the economy is not fully utilizing its resources. Efficiency b. specialization c. inefficiency d 18. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. b.) Production Possibility Curve (PPC) is the locus (the path of a moving point) of various combinations of two commodities which can be produced with given level of resources and technology. It is on the production possibility curve and the allocation reflects people's tastes for lots of lawns, technological advances in producing crops, and the globalization of agricultural markets. If a production point lies inside or on the curve—like point C, at which Tom catches 20 fish and gathers 9 coconuts—it is feasible. Points within the curve show when a country’s resources are not being fully utilised B. specialisation. c.) Reflects the fact that more technology needs to be developed to fully employ all resources. D) could indicate that resources are misallocated. c. If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources? c. the curve will begin to shift inward. Points Earned: 1.0 7. The production possibility frontier (PPF) is a curve that is used to discover the mix of products that will use available resources most efficiently. A point inside a production possibilities curve reflects: A) the law of increasing costs. C) less than full use of resources and technology. If an economy is operating at a point inside the production possibilities curve? Prof. Paul A. Samuelson used the concept of the production possibility curve to explain the economic problem of a society. Production possibility curve shows the different combinations of the production of two commodities that can be achieved in an economy given the resources and technology which are to be fully utilized. 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