Production Possibility Curve

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  • Q1

    Any point inside the production possibility curve indicates

    Marks:1
    Answer:

    underutilisation of resources.

    Explanation:
    Any point inside the PPC indicates underutilisation of resources and any point on the PPC indicates full and efficient utilisation of resources.
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  • Q2

    In case of natural calamity, PPC will

    Marks:1
    Answer:

    shift leftwards.

    Explanation:
    A natural calamity will lead to destruction of resources; hence, PPC will shift leftwards.
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  • Q3

    Production possibilities schedule is made with the assumption that

    Marks:1
    Answer:

    resources are used fully and efficiently.

    Explanation:

    Production possibility schedule or production possibility curve is based on the assumption of two commodities, given quantity of resources, constant technology and fuller and efficient utilisation of resources.

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  • Q4

    The shape of PPC convex to the origin  implies

    Marks:1
    Answer:

    decreasing marginal opportunity cost.

    Explanation:
    If the marginal opportunity cost decreases along the PPC then the PPC will be convex to the origin. In the normal situation PPC is concave to the origin.
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  • Q5

    An increase in the productivity of workers in an economy will cause the PPC to

    Marks:1
    Answer:

    shift rightwards.

    Explanation:

    An increase in productivity of workers will result in growth of resources in the economy. Thus, the PPC will shift to the right.

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