SS141 Macro-Economics Professor Patrick Yanez
Study Questions – “Production Possibility Curve” - Set 1
These questions are to facilitate your discussion groups and/or tutoring sessions. Answers are listed at the end of this
file. Since our class time is limited to introducing new topics, we do not have time to review these questions in class;
please use your discussion group and/or tutoring session to review these questions.
1. The production possibilities curve illustrates the basic principle that:
a) the production of more of any one good will in time require smaller and smaller sacrifices
of other goods.
b) an economy will automatically obtain full employment of its resources.
c) if all the resources of an economy are in use, more of one good can be produced only if
less of another good is produced.
d) an economy's capacity to produce increases in proportion to its population size.
2. Which of the following will not produce an outward shift of the production possibilities
curve?
a) an upgrading of the quality of a nation's human resources
b) the reduction of unemployment
c) an increase in the quantity of a society's labor force
d) the improvement of a society's technological knowledge
3. Unemployment and/or productive inefficiencies:
a) cause the production possibilities curve to shift outward.
b) can exist at any point on a production possibilities curve.
c) are both illustrated by a point outside the production possibilities curve.
d) are both illustrated by a point inside the production possibilities curve.
4. If the production possibilities curve is a straight line:
a) the two products will sell at the same market prices.
b) economic resources are perfectly shiftable between the production of the two products.
c) the two products are equally important to consumers.
d) equal quantities of the two products will be produced at each possible point on the curve.
5. A production possibilities curve illustrates:
a) scarcity.
b) market prices.
c) consumer preferences.
d) the distribution of income.
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