450 400 350 300 E 250 200 150 100 50 0 F P on 0 10 20 30 40 50 60 70 Sewing Mach

Question

450 400 350 300 E 250 200 150 100 50 0 F P on 0 10 20 30 40 50 60 70 Sewing Machines 1. Which point in the graph illustrates an inefficient level of production? A 2. Inefficient levels of production result in 3. Which point in the graph illustrates an unattainable level of production? 4. Unattainable levels of production are a result of a 5. What is the opportunity cost of producing point E (50,80) instead of point D (40,155)? clothes 6. Which of the following could cause a shift outward in the Production Possibilities Frontier from PPF P.1 to PPF P2? of resources? of resources? units of A. Unemployment in the economy decreases B. Demand only for clothing increases C. There is an increase the workforce due to a population increase D. Demand for both clothing and sewing machines increases

Explanation / Answer

Answer

1) Inefficient level of production is that point on PPF which is inside PPF hence the correct answer is A

2) This inefficient level results in unemployment of resources.

3) Unattainable point is that point which is outside PPF. Hence Point C in the graph illustraits an unattainable level of Production.(Outside PPF1)

4) Unattainable levels of production are a result of Unavailability of Resources.(That point is unattainable because Resources are not enought to attain that level.

5) In order to produce 50 units of Sewing machines istead of 40 units they have to sacrifice 155 - 80 = 75, Hence Opportunity cost of producing point E instead of point D is 75 units of clothes.

6) PPF shift when there is increase in resources. Hence The correct answer is (c) There is an increase in workforce due to a population increase.

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