Prescribing or (setting) norms or (Standards). The production possibilities frontier helps us answer the second economists' question - "What are the trade offs?" A point inside a production possibilities curve represents things that can be produced. When an economy chooses a point inside the production possibilities frontier, it could produce more of both goods with its given resources, T or F: Based on the assumption of efficiency, we can predict that an economy will choose to produce at a point ON the frontier rather than INSIDE it, When technology improves the production of one good, the production possibilities frontier, An increase in available resources shifts the entire frontier _______________, When the working population decreases, the production possibilities frontier, The production possibilities frontier shows the production constraint of two _____________ that can be produced using all ___________ resources, Without trade, points that lie outside the production possibilities frontier are, True or false: Points inside the production possibilities frontier are achievable, but still make use of all available resources, Points on the production possibilities frontier are efficient because, that combination of two outputs can be produced using all available resources, Points inside the production possibilities frontier are attainable but, The production possibilities frontier pivots up so that more of the good on the y-axis can be produced using the same amount of resources. A point outside the production possibilities frontier a. represents unemployment of resources b. represents full employment of resources c. would not represent an efficient combination of goods d. cannot be reached using the available technology e. is less desirable than one that lies inside the frontier … The slope of the production possibilities frontier represents the magnitude of this tradeoff. a. efficient but not feasible. Therefore, both inefficient output combinations and efficient output combinations are feasible, but not all feasible points are efficient. Points on (rather than inside) the production possibilities frontier represent efficient levels of production, The Production Possibilities Frontier: trade offs. A more efficient use of available resources . What is the status of the economy? 15)A point inside a production possibilities frontier A)implies that too much capital and not enough labor are being used. A-the prices of goods B-the number of goods made C-how much people want two products. The circular-flow diagram offers a simple way of organizing the economic transactions that occur between households and firms in the economy, a graph that shows the various combinations of output that the economy can possibly produce given the available factors of production and the available production technology that firms use to turn these factors into output. 1. the production possibilities frontier shows one trade-off that society faces. The opportunity cost of producing one good in terms of the other, increases as more of a good is produced, because skills vary among workers, Points _________ the production possibilities frontier are inefficient while points ________ the production possibilities frontier are efficient. If two countries have different opportunity costs and they set a favorable trading price, there are gains to be had from trade and there is room for trade, _______ _________ ________ is the improvement in outcomes that occurs when producers specialize and exchange goods and services, Geographic shifts in the production of clothing has occurred because of lower relative _________. Topics studied on a larger scale. 15) 16)A point inside a production possibilities frontier 21. A macroeconomist might study the effects of borrowing by the federal government, the changes over time in the economy's rate of unemployment, or alternative policies to promote growth in national living standards. b. feasible but not efficient. Are equally desirable. Points inside the production possibilities frontier are attainable but. False. inefficient. Measurable and backed by statistical data. Select one: a. such as labor, land, and capital (buildings and machines). A-efficient use of resources B-too many resources … A point inside a production possibilities curve represents things that can be produced. (Points: 1) simplify reality in order to highlight what really matters attempt to duplicate reality in all its complexity ignore the facts, and instead try to determine what the facts should be do all of the above 2. D)is unattainable. All choices along the curve shows production efficiency of both goods. This is caused by, an improvement in technology used to produce the good on the y-axis, When the working population increases, the production possibilities frontier, The production possibilities frontier gives us a way to represent the _____________ on production. Any point on a production possibilities frontier represents: efficient production. Points outside production possibilities frontiers, Points located outside the production possibilities frontier represent output combinations that are infeasible. Points located on or inside the production possibilities frontier represent feasible output combinations. The PPCs does not indicate a country’s ability to consume goods. Topics studied on a smaller scale. Points within the curve show when a country’s resources are not being fully utilised (cars, toys, computers), The Production Possibilities Frontier- efficient outcome, An outcome is said to be efficient if the economy is getting all it can from the scarce resources it has available. There is room for trade as long as the two countries _________ in their opportunity costs to produce a good and they set a trading price that __________________ those opportunity costs, When you lose comparative advantage in one thing, you ________ it in another thing, T or F: If we specialize in the good for which we have a comparative advantage and trade for the other good, it is possible to consume at a level beyond our own production possibilities, When individuals seek to make profit and specialize according to their comparative advantage, we could say that the system operates as though there was a(n), When specialized producers exchange goods and services, outcomes improve because of. Points located on or inside the production possibilities frontier represent attainable output combinations. This video shows how to calculate the slope of a Production Possibilities Frontier and discusses the intuitive meaning behind the slope of the PPF. The households sell the use of their labor, land, and capital to the firms in the markets for the factors of production. Therefore, both productive inefficient output combinations and productive efficient output combinations are attainable, but not all attainable points are efficient. Positive statements are descriptive. Once we have reached an efficient point on the frontier, the only way of producing more of one good is to produce less of the other. b. Since the production possibilities frontier represents all of the points where all resources are being used efficiently, it must be the case that this economy has to produce fewer guns if it wants to produce more butter, and vice versa. A production possibilities frontier, or PPF, defines the set of possible combinations of goods and services a society can produce given the resources available. School full-time that is on the production possibilities frontier What does each point inside a production possibilities frontier one. 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