PPFs
Question 1
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PPFs Look at the PPF and decide whether the statements that follow are true or false: |
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R has the lowest level of unemployment.
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N is currently not achievable.
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A movement from M to L has an opportunity cost of C2 to C3.
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As more capital goods are produced the opportunity cost falls.
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A movement from R to S is impossible.
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T is likely to have the lowest standard of living in the short run.
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M is likely to have the highest standard of living in the long run.
Question 2
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Production
possibilities Consider the information on Utopia, a hypothetical economy that can produce either rice or beans using all its scarce resources. The figures are in tonnes. |
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Plot the PPF for Utopia, with rice on the Y-Axis, and beans on the x-axis.
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What is the opportunity cost of increasing production of rice from 30m tonnes to 40m?
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Comment on the situation experienced by Utopia if it produces 50m tonnes of rice and 50m of beans.