Cambridge International A Level · Economics (9708)

Production possibility curves: Practice Questions

5 multiple-choice questions marked as you go, and 5 written questions with worked solutions. All on Production possibility curves.

10 questions23 marksFree, no account

Question 1

1 mark

What is illustrated by a movement along a Production Possibility Curve (PPC)?

Question 2

1 mark

An economy has a linear Production Possibility Curve. It can produce either \(200\) units of Good X or \(800\) units of Good Y.
What is the opportunity cost of producing one additional unit of Good X?

Question 3

1 mark

In the diagram, an economy's Production Possibility Curve (PPC) for Capital Goods and Consumer Goods is concave to the origin. If a major technological innovation occurs that exclusively improves productivity in the Capital Goods sector, what is the most likely effect on the opportunity cost of producing Consumer Goods as the economy moves along the new PPC?

Question 4

1 mark

What does a movement along a Production Possibility Curve (PPC) represent?

Question 5

1 mark

An economy has a linear Production Possibility Curve. It can produce either \(150\) units of Good X or \(450\) units of Good Y.
What is the opportunity cost of producing one additional unit of Good X?

Question 6

2 marks

Describe the likely impact on a country's Production Possibility Curve (PPC) of a significant improvement in the quality of its labour force.

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Question 7

3 marks

A country experiences a significant emigration of its skilled workforce. Describe the impact of this event on the Production Possibility Curve (PPC) and explain why this shift occurs.

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Question 8

2 marks

If an economy's Production Possibility Curve (PPC) is represented as a straight line, what does this indicate about the opportunity cost as the economy reallocates resources from one good to another?

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Question 9

6 marks

A country’s Production Possibility Curve (PPC) illustrates the maximum combinations of capital goods and consumer goods that can be produced using all available resources efficiently.

(a) Explain why a PPC is typically drawn as concave to the origin and identify the specific economic principle that determines this shape. [2]

(b) Using a diagram, illustrate the difference between a movement from a point inside the PPC to a point on the boundary, and a parallel outward shift of the entire PPC. [3]

(c) Explain one possible cause for a leftward shift of the PPC. [1]

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Question 10

5 marks

An economy is currently producing at a point on its Production Possibility Curve (PPC), allocating resources between Agricultural Goods and Manufactured Goods.

(a) If the economy moves from producing \( (80A, 20M) \) to \( (60A, 35M) \), calculate the opportunity cost of producing the additional 15 units of Manufactured Goods.
(b) With the aid of a diagram, explain how an increase in the country's total labor force would affect the position of the PPC and the country's potential economic growth.

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