1. When economists want to describe how much an economy
can produce with a given amount of resources, they use a model
known as:
a. the positive model.
b. the normative model.
c. comparative advantage.
d. the production possibility frontier.
1 out of 1
Correct! This model shows the various
combinations of two goods that can be
produced when an economy operates
efficiently. Specifically, it shows the trade-offs
of choosing between two goods. Section:
Trade-offs: The Production Possibility Frontier
2. Economists typically depict the PPF as a bowed-out curve
rather than as a straight line in order to show that:
a. the opportunity cost of producing a good rises as more is
produced.
b. the opportunity cost of producing a good declines as more is
produced.
c. resources used in the production of one good cannot be used
in the production of another.
d. the opportunity cost is always present.
1 out of 1
Correct! The opportunity cost rises as more is
produced, because expanding the output level
means that some resources that are not well-
suited toward producing this good will be used
in providing it. Resources used in the
production of two goods are not homogeneous
or similar. As more is produced of one product,
resources are increasingly less and less suited
to its production and its opportunity cost rises.
Section: Trade-offs: The Production Possibility
Frontier
