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Economics Today: The Macro View, 5Ce (Miller)
Chapter 2 Production Possibilities and Economic Systems
1) A production possibilities curve represents
A) combinations of goods and services among which consumers are indifferent.
B) the maximum combination of goods and services that can be produced with fixed resources
and technology, given efficient use of the resources.
C) the maximum amount of labour and capital available to society.
D) the maximum rate of growth of capital and labour in a country.
Answer: B
Diff: 1 Type: MC Page Ref: 30
Skill: Recall
Objective: L.O. 2.1
Graph: No graph
Numerical: Non-numerical
2) One assumption underlying the production possibilities curve is that
A) the quantity of the resources available for the production of economic goods is fixed over a
given time period.
B) some of the factors of production are not being used.
C) at least one of the factors of production is a free good.
D) there is at least one factor of production that is employed inefficiently.
Answer: A
Diff: 2 Type: MC Page Ref: 30
Skill: Recall
Objective: L.O. 2.1
Graph: No graph
Numerical: Non-numerical
3) Which of the following is NOT an assumption used in deriving a production possibility curve?
A) The labour force is growing.
B) Resources are fully employed.
C) Technology is constant.
D) The quality of inputs is constant.
Answer: A
Diff: 3 Type: MC Page Ref: 30
Skill: Applied
Objective: L.O. 2.1
Graph: No graph
Numerical: Non-numerical
4) A society currently operating on its production possibilities curve is
A) technologically inefficient.
B) consuming too much output.
C) fully utilizing its productive resources.
D) under-utilizing its resources.
Answer: C
Diff: 1 Type: MC Page Ref: 30
Skill: Recall
Objective: L.O. 2.1
Graph: No graph
Numerical: Non-numerical
5) In the language of economics, “technology” is defined as ________.
Answer: society’s pool of applied knowledge concerning the production of goods and services.
Diff: 3 Type: SA Page Ref: 30
Skill: Recall
Objective: L.O. 2.1
Graph: No graph
Numerical: Non-numerical
6) Technology is defined in economics as
A) output beyond the production possibilities boundary.
B) the utilization of the most advanced machinery.
C) society’s pool of applied knowledge concerning how goods and services can be produced.
D) the most advanced computer hardware and software.
Answer: C
Diff: 1 Type: MC Page Ref: 30
Skill: Recall
Objective: L.O. 2.1
Graph: No graph
Numerical: Non-numerical
Figure 2-1
7) In Figure 2-1, point D shows
A) the use of all resources to produce Health Care.
B) using some resources to produce Education and some to produce Health Care.
C) the use of all resources to produce Education.
D) some unemployed resources.
Answer: C
Diff: 2 Type: MC Page Ref: 31
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
8) In Figure 2-1, the combination of outputs shown at point E could be obtained if
A) resources were used more efficiently.
B) resources were shifted from education to health care.
C) resources were shifted from health care to education.
D) there was an increase in society’s resources.
Answer: D
Diff: 2 Type: MC Page Ref: 31
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
9) In Figure 2-1, this society’s best use of scarce resources
A) occurs at point B.
B) occurs at point A.
C) occurs at point D.
D) depends on people’s wants.
Answer: D
Diff: 3 Type: MC Page Ref: 314
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
10) In Figure 2-1, point A is undesirable because
A) it represents an inefficient use of resources.
B) the opportunity costs of health care are too high.
C) too much health care is being produced.
D) point E is a more realistic option in this economy.
Answer: A
Diff: 2 Type: MC Page Ref: 31
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
11) In Figure 2-1, could point A ever be preferred to point C?
A) No, because resource use at A is inefficient and at C it is efficient.
B) Yes, because resource use at A is efficient.
C) No, because any point like C that is on the PPC is always better than any point inside it.
D) Yes, if people valued the additional health care at A more than the additional Education at C.
Answer: D
Diff: 3 Type: MC Page Ref: 32
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
12) In Figure 2-1, at point D, resource use is
A) less efficient than at point C.
B) more efficient than t point B.
C) less efficient than at point B.
D) more efficient than at point A.
Answer: D
Diff: 3 Type: MC Page Ref: 34
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
13) In Figure 2-1, the opportunity cost of moving from point B to point C
A) is the increase in output in the education sector.
B) is the loss in production in the health care sector.
C) is zero.
D) is the loss in production in the education sector.
Answer: B
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
Figure 2-2
14) In Figure 2-2, points U, V, Y, and Z show
A) a constant trade-off between televisions and computers.
B) that society prefers more televisions than computers.
C) an inefficient allocation of society’s scarce resources.
D) possible combinations of televisions and personal computers.
Answer: D
Diff: 2 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
15) In Figure 2-2, the combination of personal computers and televisions shown by point X
A) suggests that the law of increasing relative costs does not hold.
B) can be attained only if some of society’s resources are unemployed.
C) is not attainable at the point in the period for which the graph is drawn.
D) results only because society allocates its resources inefficiently.
Answer: C
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
16) The combination of personal computers and televisions shown in Figure 2-2 by point W
A) is beyond the capacity of society to produce.
B) is attainable but involves the inefficient use of some of society’s resources.
C) is more desirable than point X because producing at W does not put a strain on society’s
resources.
D) is an efficient use of society’s resources because it is below the production possibilities curve.
Answer: B
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
17) Which of the following statements about movement along the PPC in Figure 2-2 is FALSE?
A) Society cannot have more of both goods at the same time.
B) An additional computer can be produced only if fewer televisions are produced.
C) The trade-off between computers and televisions is not constant.
D) There are no opportunity costs involved in choosing one point on the curve over all other
points.
Answer: D
Diff: 3 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
18) In Figure 2-2, the PPC has the bowed shape because
A) some resources are better at producing one product than another.
B) all resources are equally good at producing both products.
C) all resources are perfectly adaptable.
D) some resources are equally good at producing both products.
Answer: A
Diff: 2 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
19) Given the production possibilities schedule in Table 2-1, a combination of 23 televisions and
6 computers
A) is attainable but involves the unemployment of some of society’s resources.
B) cannot be produced by society given its current level of resources and production technology.
C) clearly illustrates the trade-off between televisions and computers.
D) can be produced only if society is willing to have some of its resources used inefficiently.
Answer: B
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Numerical
20) Given the production possibilities schedule in Table 2-1, a combination of nine televisions
and four personal computers
A) is attainable but involves an inefficient use of society’s resources.
B) is not attainable because society does not have enough resources to produce this combination.
C) would be attainable only if a new production technology was introduced.
D) is not attainable because it is not listed in the schedule.
Answer: A
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Numerical
21) In Table 2-1, if the economy moves from point D to point E, the opportunity cost of the extra
personal computer in terms of televisions given up is ________.
Answer: 4.
Diff: 3 Type: SA Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Numerical
22) In Table 2-1, if the economy moves from point F to point E, ________ televisions are gained
at a cost of ________ given up.
Answer: 5, 1
Diff: 1 Type: SA Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Numerical
23) In Table 2-1, if the economy moves from point F to point D, ________ televisions are gained
at a cost of ________ computers given up.
Answer: 9, 2
Diff: 3 Type: SA Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Numerical
24) In Table 2-1, the opportunity cost of each additional television in terms of computers given
up
A) falls as more computers are produced.
B) increases as more computers are produced.
C) is meaningless because the cost of computers cannot be expressed in terms of televisions.
D) remains constant.
Answer: B
Diff: 3 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Numerical
25) In Table 2-1, the opportunity cost of each additional computer in terms of televisions given
up
A) falls as more computers are produced.
B) increases as more computers are produced.
C) is meaningless because the cost of computers cannot be expressed in terms of televisions.
D) remains constant.
Answer: B
Diff: 3 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Numerical
Figure 2-3
Tonnes
of
Soybeans
26) A farmer has 100 hectares of land on which he can grow either soybeans or corn. A hectare
of land yields 200 tonnes of soybeans or 100 tonnes of corn. Figure 2-3 shows the farmer’s
A) trade-off curve.
B) opportunity cost curve.
C) substitution options curve.
D) production possibilities curve.
Answer: D
Diff: 1 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
27) In Figure 2-3, how many units of corn are produced at point “a”?
A) 2,500
B) 3,000
C) 2,000
D) Can’t tell without more information.
Answer: A
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Numerical
28) Given Figure 2-3 as the PPC for a particular farmer, if the farm is producing 7,000 tonnes of
soybeans at point b, we know that
A) the farmer must be using only 75 hectares of his land.
B) the farmer must have leased an additional 25 hectares of land.
C) the farmer must be producing 5000 tonnes of corn.
D) if the farmer were using his resources efficiently, he could be producing 6500 tonnes of corn.
Answer: D
Diff: 3 Type: MC Page Ref: 33
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Numerical
29) Given the PPC in Figure 2-3, if farmers are producing 7,000 tonnes of soybeans at point b,
they
A) must be using more land than was used in constructing the production possibilities curve.
B) are productively inefficient and resource use therefore is allocatively inefficient.
C) are productively inefficient but overall resource use is allocatively efficient.
D) are using land to produce a crop other than soybeans or corn.
Answer: B
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
30) The PPC shown in Figure 2-3 shows that the opportunity cost of a tonne of corn is
A) 1/2 tonne of soybeans..
B) 1 tonne of soybeans.
C) 1 1/2 tonnes of soybeans.
D) 2 tonnes of soybeans.
Answer: D
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
31) The production possibilities curve shown in Figure 2-3 shows that the opportunity cost of
each tonne of soybeans is
A) 1 tonne of corn.
B) 1/2 tonne of corn.
C) 2/3 tonnes of corn.
D) 2 tonnes of corn.
Answer: A
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
32) A movement along the production possibilities curve would suggest that
A) society has chosen to produce a different set of outputs.
B) productivity has declined because workers are demanding more leisure.
C) the labour force has grown.
D) productivity has increased.
Answer: A
Diff: 1 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
33) A point outside a production possibilities curve shows
A) that resources are not being used efficiently.
B) that resources are being used very efficiently.
C) that opportunity costs are constant.
D) an output combination attainable only if society gets more resources or technological change
occurs.
Answer: D
Diff: 1 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
34) A point outside a society’s PPC is
A) technologically inefficient.
B) unattainable given the resources of the society and current technology..
C) undesirable given the implied underemployment of resources.
D) desirable since it satisfies the desires of the population.
Answer: B
Diff: 1 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
35) A point located inside a society’s production possibilities curve represents
A) an unattainable combination of outputs.
B) an under-utilization of productive resources.
C) a technically superior output combination.
D) an output combination which satisfies the needs of the population.
Answer: B
Diff: 1 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
36) If an economy is operating at a point located inside the production possibilities curve, then
A) society’s resources are being inefficiently utilized.
B) the curve will move to the left.
C) the curve will move to the right.
D) society’s resources are being used to produce too many consumer goods.
Answer: A
Diff: 1 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
37) Which of the following would cause an economy to produce at a point inside its PPC?
A) population growth
B) the efficient allocation of all factors of production
C) unemployment or inefficient use of available resources
D) capital accumulation
Answer: C
Diff: 1 Type: MC Page Ref: 32
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
38) The prime minister of Canada promises to produce more defence goods without causing any
decreases in the production of other goods. Such a promise could be valid
A) if Canada is currently producing inside its production possibilities curve.
B) if Canada is producing to the right of its production possibilities curve.
C) if Canada is producing at a point on its production possibilities curve.
D) under no possible circumstances; the production possibilities curve would have to shift to the
right.
Answer: A
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
39) A society on its production possibilities curve is
A) technologically inefficient but allocatively efficient.
B) consuming too much output.
C) fully utilizing its productive resources but may or may not be allocatively inefficient.
D) under-utilizing its resources.
Answer: C
Diff: 3 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
40) Production is efficient if
A) it generates a point beyond the production possibility curve.
B) the maximum output possible given available resources and current technology.
C) technological change occurs.
D) the maximum amounts of the most important goods are produced.
Answer: B
Diff: 2 Type: MC Page Ref: 33
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
41) Allocative efficiency is achieved when
A) a point beyond the production possibilities curve is reached.
B) technological change occurs.
C) the economy is producing on its production possibilities curve.
D) the maximum amounts of the most desired goods and services are being produced.
Answer: D
Diff: 2 Type: MC Page Ref: 34
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
42) Productive efficiency is correctly defined as
A) producing outside the production possibilities boundary.
B) providing for the immediate needs of the greatest proportion of the population.
C) minimizing opportunity cost.
D) producing the maximum output possible with given technology and resources.
Answer: D
Diff: 1 Type: MC Page Ref: 33
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
Figure 2-4
43) In Figure 2-4, which of the following points indicates a productively inefficient use of
resources?
A) f
B) g
C) a
D) h
Answer: A
Diff: 1 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
44) In Figure 2-4, between points b and c the opportunity cost of 250 tonnes of corn is
A) 250 metres of cloth.
B) 400 metres of cloth.
C) 600 metres of cloth.
D) 200 metres of cloth.
Answer: D
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Numerical
45) Between c and b in Figure 2-4, the opportunity cost of another tonne of corn is (on average)
A) 1 metre of cloth.
B) 100/125 metres of cloth.
C) 100/250 metres of cloth.
D) 1.25 metres of cloth.
Answer: B
Diff: 3 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Numerical
46) Between points c and b in Figure 2-4, the opportunity cost of 200 metres of cloth is
________.
Answer: 250 tonnes of corn.
Diff: 3 Type: SA Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Numerical
47) Between points b and c in Figure 2-4, the (average) opportunity cost of another metre of
cloth is ________.
Answer: 1.25 tonnes of corn.
Diff: 3 Type: SA Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Numerical
48) The shape of the production possibilities curve in Figure 2-4 indicates that
A) production of both corn and cloth is characterized by constant costs.
B) production of corn is characterized by constant costs and the production of cloth by increasing
costs.
C) production of both corn and cloth is characterized by increasing costs.
D) production of corn is characterized by increasing costs while the production of cloth is
characterized by decreasing costs.
Answer: C
Diff: 3 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
49) In Figure 2-4, the bowed-out shape of the production possibilities curve indicates that
A) resources are being used efficiently.
B) resources are being used inefficiently.
C) production is efficient but the economy is experiencing allocative inefficiency.
D) some resources are relatively better at producing corn and others are better at producing cloth.
Answer: D
Diff: 2 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
50) In Figure 2-4, which of the following would NOT be a means by which society might move
to point h?
A) an improvement in technology.
B) an increase in quantity of capital.
C) an increase in quantity of labour.
D) more efficient use of current resources.
Answer: D
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: With graph
Numerical: Non-numerical
51) Consider the following production possibilities table for drill presses and corn. The table
shows the maximum combination of drills and corn that can be produced when all resources are
fully employed.
Drill Presses 10 20 30 40 50
Corn 150 140 120 90 50
Based on the information in the table,
A) the opportunity cost of producing 40 drill presses instead of 30 drills is 30 corn.
B) there is a constant trade-off between corn and drill presses.
C) the production possibilities curve for drill presses and corn will be a straight line.
D) the opportunity cost of producing 30 drill presses instead of 20 drills is 120 corn.
Answer: A
Diff: 3 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Numerical
52) If a production possibilities curve for books and magazines is a straight line, then the
A) opportunity cost of increasing book production stays constant regardless of the quantity
produced.
B) opportunity cost of increasing book production continues to decline as total production
increases.
C) opportunity cost of increasing book production is independent of the shape of the curve.
D) opportunity cost of increasing book production continues to increase as total production
increases.
Answer: A
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
53) A straight-line production possibilities curve would indicate that
A) resources are better suited for producing one output than another.
B) the opportunity cost of producing more of a good is decreasing.
C) the opportunity cost of producing a good is constant.
D) resources are fixed.
Answer: C
Diff: 3 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
54) If opportunity costs remained constant, then
A) the production possibilities curve would bow outward.
B) the production possibilities curve would be a straight line.
C) the production possibilities curve would not exist.
D) factors of production must not be fully employed.
Answer: B
Diff: 2 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
55) The fact that a country’s production possibilities curve bows outward tells us that
A) opportunity costs are fixed as the production of a good increases.
B) opportunity costs decrease as the production of a good increases.
C) resources are of uniform quality.
D) opportunity costs increase as the production of a good increases.
Answer: D
Diff: 3 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
56) A straight-line PPC would indicate that there is
A) no opportunity cost between the two goods.
B) an increasing opportunity cost between the two goods.
C) a constant opportunity cost between the two goods.
D) a decreasing opportunity cost between the two goods.
Answer: C
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
57) Increasing opportunity cost implies that
A) producing additional units of one good results in increasing amounts of lost output of the
other.
B) producing additional units of one good results in proportionately smaller reductions in the
other.
C) the society will be producing on its production possibilities curve.
D) the production possibilities curve will be a straight line.
Answer: A
Diff: 3 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
58) A production possibilities curve bowed outward is consistent with
A) highly specialized resources.
B) a technologically inefficient society.
C) constant opportunity cost.
D) the under-utilization of productive resources.
Answer: A
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
59) A production possibilities curve that is bowed outward occurs when
A) successive additions of one good require greater and greater reductions in the other.
B) resources are not scarce.
C) opportunity costs are constant.
D) the society is operating on the production possibilities curve.
Answer: A
Diff: 3 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
60) The law of increasing relative cost states that
A) producing additional units of one good results in increasing amounts of lost output of the
other.
B) producing additional units of one good results in proportionately smaller reductions in output
of the other.
C) the economy will be producing on its production possibilities curve.
D) the production possibilities curve will be a straight line.
Answer: A
Diff: 3 Type: MC Page Ref: 34
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
61) A production possibilities curve that is bowed outward indicates that
A) additional units of output of one good necessitate increased reductions in the other good as
more and more of the first is produced.
B) resources are scarce.
C) opportunity costs are constant.
D) the society is operating on the production possibilities curve.
Answer: A
Diff: 3 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
62) Increasing relative costs are the result of
A) high taxes.
B) increasing scarcity.
C) the fact that resources are not perfectly adaptable for alternative uses.
D) the fact that the more society produces, the more difficult it is to use resources efficiently.
Answer: C
Diff: 1 Type: MC Page Ref: 35
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
63) If a country’s production possibilities curve gets more bowed out over time, we know that
A) resources have become more highly specialized.
B) society is learning to use its resources more efficiently.
C) the quantity of labour and capital have increased.
D) technological change has taken place.
Answer: A
Diff: 2 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
22
64) If all resources are perfectly adaptable for alternative uses, the production possibilities curve
will
A) be a straight line.
B) be bowed in.
C) be bowed out.
D) not exist.
Answer: A
Diff: 3 Type: MC Page Ref: 35
Skill: Applied
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
65) Economic growth can be pictured in a production possibilities curve diagram by
A) an inward shift of the production possibilities curve.
B) an outward shift of the production possibilities curve.
C) an increasingly bowed out production possibilities curve.
D) a production possibilities curve that is less bowed out.
Answer: B
Diff: 1 Type: MC Page Ref: 32
Skill: Recall
Objective: L.O. 2.2
Graph: No graph
Numerical: Non-numerical
