Production Possibility Curve

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  • Q1

    Consider the following statements and identify the wrong one.

    Marks:1
    Answer:

    Any point below the production possibility curve indicates the problem of scarcity.

    Explanation:

    Any point below the PP Curve indicates the problem of unemployment and inefficiency and any point above the PP curve shows the problem of scarcity.

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  • Q2

    Production Possibility Curve slopes ____________.

    Marks:1
    Answer:

    Downwards to right

    Explanation:

    Production Possibility Curve slopes downwards to the right indicating that the economy has to forgo some quantity of one commodity to have more quantity of other commodity.

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  • Q3

    Production Possibility Curve is _________ to the point of origin.

    Marks:1
    Answer:

    Concave

    Explanation:

    Production Possibility Curve is concave to the point of origin which shows the operation of the law of increasing marginal opportunity cost.

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  • Q4

    Which is/are the assumption/s on which production possibility curve is based?

    (1) No change in technology

    (2) Quantity of productive resources are fixed

    Marks:1
    Answer:

    Both (1) and (2)

    Explanation:

    Production Possibility Curve is based upon following assumptions:

    (i) The amount of productive resources is fixed
    (ii) There is no change in technology
    (iii) All the productive resources are fully employed
    (iv) All resources are not equally efficient in the production of all goods.

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  • Q5

    PPC stands for

    Marks:1
    Answer:

    Production Possibility Curve

    Explanation:

    Production Possibility Curve is a curve which shows all possible combinations of two goods that can be produced by making full use of given resources and technology in an economy.

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