Multiple Choice Questions:
Use the diagram to answer questions 1 through 4.


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1. Currently, it is not possible to produce at
a. point A.
b. point B.
c. point E.
d. point G.
e. either point E or point G.
2. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from
a. A to B.
b. B to E.
c. C to F.
d. G to F.
e. None of the above are correct.
3. Along the production possibilities curve, the most efficient point of production depicted is
a. point B.
b. point C.
c. point D.
d. point G.
e. All points on the production possibilities curve are equally efficient.
4. The opportunity cost of one more unit of bread is greater at point ___than at point ___.
a. G; B
b. C; A
c. A; C
d. None of the above. The opportunity cost of a good is constant everywhere along the production possibilities curve.
5. Which of the following is consistent with the implications of the production possibilities curve?
a. If the resources in an economy are being used efficiently, scarcity will not be a problem.
b. If the resources in an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
c. Producing more of any one good will require smaller and smaller sacrifices of other goods as more of that good
is being produced in an economy.
d. An economy will automatically attain that level of output at which all of its resources are fully employed.
e. Both b and c are consistent with the implications of the production possibilities curve.
6. Consider a production possibilities curve for an economy producing bicycles and video game players. It is possible to increase the production of bicycles without sacrificing video game players if
a. the production possibilities curve shifts outward due to technological progress.
b. the production possibilities curve shifts outward due to increased immigration (which enlarges the labor force).
c. the economy moves from a point inside the production possibilities curve to a point on the curve.
d. any of the above occurs.
e. either a or b, but not c, occurs.
7. What determines the position and shape of a society’s production possibilities curve?
a. the physical resources of that society
b. the skills of the workforce
c. the level of technology of the society
d. the number of factories available to the society
e. all of the above