Question 1

Based on the PPF diagram, which point represents an inefficient use of resources?

Accepted Answer

Point C

Question 2

What does point D on the PPF diagram represent?

Accepted Answer

An unattainable combination with current resources and technology

Question 3

If the economy is operating at point A on the PPF, what does this indicate?

Accepted Answer

Resources are being used efficiently

Question 4

Which of the following would cause the PPF to shift outward?

Accepted Answer

A technological improvement

Question 5

Why is the PPF typically bowed outwards?

Accepted Answer

Because of the law of increasing opportunity cost

Question 6

If the economy moves from point C to point A on the PPF, what does this represent?

Accepted Answer

A more efficient use of resources

Question 7

What is the opportunity cost of moving from point A to point B on the PPF?

Accepted Answer

The amount of Product A given up

Question 8

Which of the following statements is true about points inside the PPF?

Accepted Answer

They represent inefficient use of resources

Question 9

Suppose a new technology allows more of both Product A and Product B to be produced with the same resources. How would this be shown on the PPF diagram?

Accepted Answer

A shift of the PPF outward

Question 10

If the economy is at point B, what must happen to produce at point D?

Accepted Answer

Increase resources or improve technology

Question 11

The slope of the PPF at any given point represents:

Accepted Answer

The marginal rate of transformation

Question 12

If the economy is producing at a point inside the PPF, what is the most likely cause?

Accepted Answer

There is unemployment or inefficiency

Microeconomics Study Notes: Scarcity, Choice, and Market Equilibrium

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