2. USAEO Microeconomics

Production Possibilities — Quiz

Test your understanding of production possibilities with 5 practice questions.

Practice Questions

Question 1

A production possibilities frontier (PPF) for an economy shows the maximum possible output combinations of two goods, X and Y, given available resources and technology. If the economy is currently producing at a point inside the PPF, what does this indicate?

Question 2

Consider an economy that produces only two goods: computers and wheat. If the economy decides to produce more computers, what happens to the opportunity cost of producing wheat as it moves along a concave (bowed-out) PPF?

Question 3

Suppose an economy’s production possibilities frontier (PPF) for goods X and Y is represented by the equation $X^2 + Y^2 = 100$. If the economy is currently producing 6 units of X, how many units of Y can it produce if it is operating on the frontier?

Question 4

Which of the following would lead to an outward shift of the production possibilities frontier (PPF)?

Question 5

An economy is producing on its PPF for goods A and B. If it reallocates resources from producing good A to producing good B, what happens to the marginal opportunity cost of producing good B as more of good B is produced (assuming a concave PPF)?