Question 1

Suppose the Czech Republic can produce either 800 million liters of beer or 800 million kilograms of chocolate per year. If they decide to produce only 400 million kilograms of chocolate, how much beer can they produce if the PPF is a straight line?

Accepted Answer

400 million liters

Question 2

If the opportunity cost of producing 1 kg of chocolate in the Czech Republic is 1 liter of beer, what is the opportunity cost of producing 1 liter of beer?

Accepted Answer

1 kg of chocolate

Question 3

Which of the following best describes a production possibility frontier (PPF) that is a straight line?

Accepted Answer

Opportunity costs are constant as production shifts between goods.

Question 4

If the PPF is concave (bowed out from the origin), what does this imply about opportunity costs?

Accepted Answer

Opportunity costs increase as more of a good is produced.

Question 5

Suppose the Czech Republic is currently producing at a point inside its PPF. What does this indicate about its resource use?

Accepted Answer

Some resources are unemployed or used inefficiently.

Question 6

If the Czech Republic moves from producing only beer to producing only chocolate, what is the total opportunity cost in terms of beer?

Accepted Answer

$$800$$ million liters of beer

Question 7

Which of the following is a likely reason for increasing opportunity costs as more of a good is produced?

Accepted Answer

Inputs are not perfectly adaptable to all uses.

Question 8

If the opportunity cost of producing chocolate decreases as more chocolate is produced, what shape does the PPF have?

Accepted Answer

It is bowed in toward the origin (concave to the axes).

Question 9

China experienced rapid economic growth while it was inside its PPF. According to the study materials, what happened as it approached its PPF?

Accepted Answer

Growth slowed because tough choices and trade-offs became necessary.

Question 10

In the Soviet Union's 5-year plan, Stalin set production targets at point B, which was outside the PPF. What was the result of this policy?

Accepted Answer

The economy could not achieve B and ended up at a point with more tractors but much less food, leading to famine.

Question 11

Suppose the opportunity cost of producing 1 tractor in the USSR is 5 tons of food. If the USSR increases tractor production by 10 units, how much food must be given up?

Accepted Answer

$$50$$ tons of food

Question 12

Which of the following statements about the PPF is correct?

Accepted Answer

Points outside the PPF are unattainable with current resources and technology.

Question 13

If a country is producing at a point on its PPF, what does this imply about its efficiency?

Accepted Answer

The country is using all its resources efficiently.

Question 14

Suppose the Czech Republic can produce either 800 million liters of beer or 800 million kilograms of chocolate. If the PPF is linear, what is the equation of the PPF?

Accepted Answer

$$Beer + Chocolate = 800$$

Question 15

If the Czech Republic is currently producing 600 million liters of beer and 200 million kilograms of chocolate, what is the opportunity cost of increasing chocolate production by 100 million kilograms, assuming a straight-line PPF?

Accepted Answer

100 million liters of beer

Question 16

Which of the following real-world scenarios best illustrates the concept of increasing opportunity costs?

Accepted Answer

A farmer reallocates land from wheat to corn, but as more land is shifted, the land is less suitable for corn, so more wheat must be given up for each additional unit of corn.

Question 17

If mass production techniques make it cheaper to produce more chocolate, what happens to the opportunity cost of chocolate as output increases?

Accepted Answer

The opportunity cost decreases.

Question 18

Which of the following would cause a country's PPF to shift outward?

Accepted Answer

An improvement in technology for both goods.

Question 19

If the USSR tried to produce at point B, which was outside its PPF, what economic principle did this violate?

Accepted Answer

Scarcity of resources

Question 20

Suppose the Czech Republic is producing at a point on its PPF and wants to increase chocolate production. What must happen to beer production?

Accepted Answer

Beer production must decrease.

Production Possibility Frontiers and Opportunity Costs

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