Question 1

Suppose Choiceland is currently producing 45 units of Good X and 900 units of Good Y. If production of Good X increases to 60 units, what is the opportunity cost of this increase?

Accepted Answer

$$300$$ units of Good Y

Question 2

Why is the production possibilities boundary (PPB) typically concave to the origin?

Accepted Answer

Because resources are not equally productive in all uses, leading to increasing opportunity costs.

Question 3

If Choiceland increases its workforce from 250 to 300 workers, what happens to its production possibilities boundary (PPB)?

Accepted Answer

The PPB shifts outward, reflecting increased productive capacity.

Question 4

Bert can make either 2 cabinets or 1 dresser per day. Jerry can make either 1 cabinet or 2 dressers per day. What is Bert's opportunity cost of producing one dresser?

Accepted Answer

$$2$$ cabinets

Question 5

Suppose Jerry improves and can now make either 2 cabinets or 3 dressers per day. What is Jerry's opportunity cost of producing one dresser?

Accepted Answer

$$\frac{2}{3}$$ cabinets

Question 6

If Bert and Jerry each specialize according to their comparative advantage and trade at a rate of 1 cabinet for 1 dresser, what is the maximum number of cabinets and dressers each can consume in a week?

Accepted Answer

5 cabinets and 5 dressers

Question 7

At point b on a PPB, an economy produces 2.5 units of clothing and 7 units of food. What is the opportunity cost of producing one more unit of food at this point?

Accepted Answer

$$2.5$$ units of clothing

Question 8

If a country is producing at a point inside its PPB, what does this indicate?

Accepted Answer

Not all resources are fully employed.

Question 9

Suppose a civil war destroys most of a country's infrastructure. What happens to its PPB?

Accepted Answer

The PPB shifts inward, reflecting a loss of productive capacity.

Question 10

If new technology doubles the ability to produce food but does not affect clothing, how does the PPB change?

Accepted Answer

The PPB shifts outward only along the food (horizontal) axis.

Question 11

If an earthquake destroys many clothing factories, what happens to the PPB?

Accepted Answer

The PPB shifts inward only along the clothing (vertical) axis.

Question 12

Given the following combinations, what is the opportunity cost of producing one more door when moving from 1000 windows and 250 doors to 500 windows and 500 doors?

Accepted Answer

$$4$$ windows per door

Question 13

If the opportunity cost of producing Good X increases as more of it is produced, what does this imply about the PPB?

Accepted Answer

The PPB is concave to the origin.

Question 14

Suppose Choiceland is producing 60 units of Good X and 900 units of Good Y. If production of Good X increases to 75 units, and Good Y falls to 350 units, what is the opportunity cost of this increase?

Accepted Answer

$$550$$ units of Good Y

Question 15

If Jerry's opportunity cost of producing a cabinet is 2 dressers, and Bert's opportunity cost is 0.5 dressers, who has the comparative advantage in producing cabinets?

Accepted Answer

Bert

Question 16

If an economy is at a point outside its PPB, what does this indicate?

Accepted Answer

The combination is unattainable with current resources and technology.

Question 17

If Bert and Jerry can both produce cabinets and dressers, but Bert has a lower opportunity cost for cabinets and Jerry for dressers, what should they do to maximize total output?

Accepted Answer

Bert should specialize in cabinets and Jerry in dressers, then trade.

Question 18

If the opportunity cost of producing each additional 15 units of Good X increases as more is produced, which economic principle does this illustrate?

Accepted Answer

The Law of Increasing Opportunity Cost

Question 19

If a country is producing at a point on its PPB, what does this indicate about its resource use?

Accepted Answer

All resources are fully and efficiently employed.

Question 20

If the opportunity cost of producing a good is constant, what is the shape of the PPB?

Accepted Answer

A straight line

Question 21

Suppose at point b on a PPB, the opportunity cost of one more unit of cloth is one unit of food. What does this mean?

Accepted Answer

To produce one more unit of cloth, the economy must give up one unit of food.

Production Possibilities Frontier & Opportunity Cost: Step-by-Step Microeconomics Guidance

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