[10-13] Refer to the information provided in Figure 2.1 below to answer the ques

Question

[10-13] Refer to the information provided in Figure 2.1 below to answer the questions that follow. Motorcycles Figure 2.1 10. According to Figure 2.1, the point where only motorcycles are produced is A) A. D) E 11. According to Figure 2.1, which point cannot be produced with the current state of technology? ) D) F 12. According to Figure 2.1, a decrease in unemployment may be represented by the movement from A) B to A B) B to D C) C to D D) A to C. 13. According to Figure 2.1, as the economy moves from Point A to Point E, the opportunity cost of motorcycles, measured in terms of hybrid cars, A) decreases. B) increases C) remains constant D) initially increases, then decreases

Explanation / Answer

10) Since motorcycles are represented on X axis, so the point where only motorcylces is produced is the point on the PPF that lies on X-axis and so the answer is point E.

11) Any point outside the Production possibility frontier is unaivalable for the economy to produce with existing technology and current amount of resources. So the answer is point F.

12) When the economy is at a point inside the PPF, then it implies that its resources are unemployed. So a movement from point C to D implies that now there is a decrease in unemployment.

13) As the economy moves from point A to point E, more hybrid cars have to given up to produce one extra unit of car. So moving from point A to E, the opportunity cost of motorcycles increases.

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