1. The production possibilities frontier is an economic model thatillustrates ma

Question

1.     The production possibilities frontier is an economic model thatillustrates maximum amount of two goods (say DVD’s and Cars)that can be produced by an economy using its resources. The rate atwhich car production may be traded for DVD production along thefrontier may best be described as:

a.       Theopportunity cost of producing DVD’s

b.      The efficiencyused to produce DVD’s

c.      Scarcity

d.      None of theabove

2.      Which ofthe following events is more likely to shift the USproduction possibilities frontier outward?

a.      Consumers begin to demand more service goods instead ofmanufactured goods.

b.      The value ofthe US dollar falls relative to other currencies.

c.       The rateof unemployment among US workers increases.

d.      Atechnological process is developed to reduce the cost of productionof manufactured goods..

Explanation / Answer

1) a 2) d

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