Question 1

Refer to the production possibilities frontier (PPF) shown in the graph. What does point B represent?

Accepted Answer

An efficient combination of hammers and wrenches, using all available resources.

Question 2

If the economy moves from point A (22, 29) to point B (30, 23) on the PPF, what is the opportunity cost of producing 8,000 more wrenches?

Accepted Answer

$$6,000$$ hammers

Question 3

Which point on the graph represents an unattainable production combination with current resources and technology?

Accepted Answer

None of the points shown are unattainable; all are on or inside the PPF.

Question 4

What does point D (22, 23) represent on the PPF?

Accepted Answer

An inefficient allocation of resources.

Question 5

If the economy is currently at point E (30, 10), what must happen to reach point B (30, 23)?

Accepted Answer

Resources must be reallocated to produce more hammers without sacrificing wrench production.

Question 6

What does the bowed-out shape of the PPF indicate about opportunity costs?

Accepted Answer

Opportunity costs increase as more of one good is produced.

Question 7

Suppose the economy moves from point C (45, 10) to point B (30, 23). What is the opportunity cost of producing 15,000 fewer wrenches?

Accepted Answer

$$13,000$$ hammers

Question 8

If technological advancement occurs in wrench production only, how would the PPF change?

Accepted Answer

The PPF would shift outward more along the wrench axis.

Question 9

Which of the following statements is true about points inside the PPF, such as point D?

Accepted Answer

They represent inefficient use of resources.

Question 10

If the economy is at point C (45, 10) and wants to produce more hammers without reducing wrench production, what must occur?

Accepted Answer

There must be an increase in resources or technological improvement.

Understanding Marginal Opportunity Cost on a Production Possibilities Frontier

Study Guide - Practice Questions