Module 3 Short Review

1. True or False? Explain your answer.
a. an increase in the amount of resources available to Tom for use in producing coconuts and fish does not change his production possibilities curve.


b. A technological change that allows Tom to catch more fish relative to any amount of coconuts gathered results in a change in his productive possibilities curve.


c. Points inside a production possibilities curve are efficient and points outside a production possibilities curve are inefficient.


AP Test Questions

Refer to the graph below for the questions.

1. Which point(s) on the graph represent efficiency in production?
A, B, C, D, E, F

2. For this economy, an increase in the quantity of capital goods produced without a corresponding decrease in the quantity of consumer goods produced
Is represented by a movement from point E to point B

3. An increase in unemployment could be represented by a movement from point:
B to E

4. Which of the following might allow this economy to move from point B to point F?
all of the above

5. This production possibilities curve shows the trade-off between consumer goods and capital goods. Since capital goods are a resource, an increase in the production of capital goods today will increase the economy’s production possibilities in the future. Therefore, all other things equal, producing at which point today will result in the largest outward shift of the PPC in the future?

Refer to the graph below. Assume that the country is producing at point C.

1. Answer the questions below.
a. Does this country’s production possibilities curve exhibit increasing opportunity costs?

Yes, because you’re using more capital goods than you’re getting back in consumer goods.

b. If this country were to go to war, the most likely move would be from point C to which point? Explain....

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