What does the Production Possibility Curve (PPC) illustrate?

The maximum potential output of an economy by utilizing all available resources.

The trade-off required to produce additional units of a specific good.

The efficient utilization of resources in producing capital goods.

The end products with no further productive utility.

How does economic growth affect the PPC?

It shifts the PPC outward, indicating increased production possibilities.

It shifts the PPC inward, limiting production capabilities.

It changes the opportunity cost at every point on the PPC.

It reduces the efficiency of resource allocation.

What is an example of a capital good in PPC?

A computer used for administrative tasks.

How is opportunity cost represented in the PPC?

As a shift from one point to another along the curve.

As the difference between consumer goods and capital goods.

As the trade-off required to produce more of one good at the expense of another.

As a measure of the efficiency of resource allocation.

What does a point inside the PPC indicate?

Maximum efficiency in resource allocation.

Unattainable production levels.

How does economic decline affect the PPC?

It shifts the PPC outward, increasing production possibilities.

It shifts the PPC inward, reducing production capabilities.

It changes the slope of the PPC.

What causes an outward shift in the PPC?

Decreased quantity of factors of production.

Improved quality of factors of production.

Decreased demand for goods and services.

Which scenario best describes an economic growth phase?

A country invests in advanced machinery to enhance production efficiency.

A decrease in consumer spending leads to reduced production of goods.

A government imposes tariffs on imports to protect local industries.

A natural disaster causes widespread damage to infrastructure.

What happens if an economy operates at a point outside its PPC?

It indicates maximum efficiency.

It signifies inefficiency in resource allocation.

It shows optimal production levels.

It suggests the potential for economic growth.

How does a shift in the PPC affect an economy?

It reduces the opportunity cost of production.

It indicates changes in consumer preferences.

It alters the maximum potential output of the economy.

It increases the efficiency of resource allocation.

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