Title: The Production Possibilities Frontier
Course: TEST Course

Q: The production possibilities model shows an inverse relationship between the amount of one thing and the amount of something else that can be produced because
- of diminishing returns.
- the opportunity cost of producing more of something will fall.
- production of different types will compete for limited resources.
A: production of different types will compete for limited resources.

Q: The production possibilities model illustrates an inverse relationship between two goods or services because
- of diminishing returns.
- the opportunity cost of producing more of something will rise.
- production of different types will compete for limited resources.
A: production of different types will compete for limited resources.

Q: Because of ________ if a city government decides to spend money on beautifying its downtown and attracting tourism to its city when no money has been devoted to those efforts before, then gains in tourism may be significant.
- the law of diminishing returns
- the opportunity cost of the production possibility tradeoff
- the production possibility frontier
A: the production possibility frontier

Q: If a city government spends a good deal of money on crime prevention and also on infrastructure maintenance, then spending even more money on crime prevention should result in
- significant gains in crime prevention.
- significant gains in infrastructure maintenance.
- relatively small gains in crime prevention.
A: relatively small gains in crime prevention.

Q: Suppose that there are only two types of output in a country: nuclear missiles and consumer goods. All else being constant, as the nation produces more missiles,
- every additional missile will increase consumer goods production by more and more.
- the opportunity cost of consumer wants being satisfied will diminish.
- the greater the opportunity cost will be of satisfying consumer wants.
A: the greater the opportunity cost will be of satisfying consumer wants.

Q: Assuming there are only two types of outputs in a country: consumer goods and nuclear missiles. All else being constant, as the nation produces more missiles,
- the more likely it is to satisfy all consumer wants.
- the opportunity cost of consumer wants being satisfied will diminish.
- every additional missile will reduce consumer goods production by more and more.
A: every additional missile will reduce consumer goods production by more and more.

Q: How does a production possibilities model differ from a budget constraint model?
- The production possibilities model depicts purchase choices.
- The budget constraint model demonstrates diminishing returns.
- The production possibilities model demonstrates diminishing returns.
A: The production possibilities model demonstrates diminishing returns.

Q: A budget constraint model differs from production possibilities model in that, typically
- the budget constraint depicts an inverse relationship, or a trade-off.
- the budget constraint demonstrates diminishing returns.
- the production possibilities model demonstrates diminishing returns.
A: the production possibilities model demonstrates diminishing returns.

Q: Consider the Production Possibility Frontier for country X producing 2 groups of goods, MP3 players and watches. The opportunity cost of one additional watch is
- Greater at C than at B
- Equal at B and C
- Greater at B than at C
A: Greater at B than at C

Q: Consider the Production Possibility Frontier for country X producing 2 groups of goods, MP3 players and watches. The opportunity cost of moving from the combination of MP3 players and watches B to C is
- 5 MP3 players
- 4 watches.
- 2 watches.
A: 2 watches.

Q: In order to satisfy as many wants as possible, it is necessary to achieve productive efficiency
- because otherwise output may go to where it is less valued.
- because producing more of one thing also leads to producing more of another.
- because otherwise resources are idle.
A: because otherwise resources are idle.

Q: In order to satisfy as many wants as possible, it is necessary to achieve allocative efficiency,
- since otherwise resources are idle.
- since it would be impossible to produce more of one thing without producing less of another.
- since otherwise output may go to where it is less valued.
A: since otherwise output may go to where it is less valued.

Q: Consider the graph of the production possibility frontier for country Z below. A combination of clothing and cell phones that would meet the productive efficiency would be:
- F
- G
- E
A: E

Q: A combination of clothing and cell phones that would meet the allocative efficiency would be:
- combination G because it represents the combination with the highest number of cell phones and clothing.
- combinations B or C because they represent a balanced quantity of cell phones and clothing.
- any combination on the production possibilities frontier that brings the highest level of satisfaction to the people in the economy.
A: any combination on the production possibilities frontier that brings the highest level of satisfaction to the people in the economy.

Q: Consider the graph of the production possibility frontier for country X. What is a combination of MP3 players and watches that would be inefficient production for country X?
- A
- E
- F
A: F

Q: Consider the graph of the production possibility frontier for country X. What would be a combination of watches and MP3 players that would meet the allocative efficiency of a country?
- Point G combination because it represents the combination with the highest number of watches and MP3 players.
- Combinations C or D because they represent a balanced quantity of watches and MP3 players.
- Any combination on the production possibilities frontier that brings the highest level of satisfaction to meet the needs of the people in the economy.
A: Any combination on the production possibilities frontier that brings the highest level of satisfaction to meet the needs of the people in the economy.

Q: Two countries are trying to decide which product should have an increased production. Both Canada and Costa Rica produce coffee and corn, but it is easier for Canada to raise corn than grow coffee. Costa Rica easily grows coffee, but has a more difficult time growing corn. In comparison with Costa Rica, Canada has
- the opportunity to increase their coffee production to better compete with Costa Rica.
- the climate to create richer tasting coffee than Costa Rica.
- a comparative advantage with corn.
A: a comparative advantage with corn.

Q: Two countries are trying to decide which product should have an increased production. Both Canada and Costa Rica produce coffee and corn, but it is easier for Canada to raise corn than grow coffee. Costa Rica easily grows coffee, but has a more difficult time growing corn. In comparison with Canada, Costa Rica has
- the opportunity to increase their corn production to better compete with Canada.
- the climate to grow larger corn plants than Canada.
- a comparative advantage with coffee.
A: a comparative advantage with coffee.