Question

2.Which of the following would not shift the Production Possibilities Frontier outward?

a	Discovering new resources

b	Improving education and training of workers

c	Improving technology

d	Increasing the capital stock

e	Reducing unemployment and other resource misallocations

3.Productive efficiency tells us

a	that we should always produce outside our Production Possibilities Frontier.

b	the production choices available that fully use our resources.

c	which combinations of products are preferred by households.

d	the exact combination of products that a nation should produce.

e.that we should produce inside the nation's Production Possibilities Frontier.

4.A country achieves allocative efficiency when

a	it produces the combination of goods and services it values most highly.

b	it produces a combination of goods and services inside its production possibilities frontier.

c	it produces a combination of goods and services that allows greater growth in the future.

d	it produces any combination of goods and services on its production possibilities frontier.

e	it produces a combination of goods and services outside its production possibilities frontier.

5.Comparative advantage

a	is when one party has a lower opportunity cost than another in producing a good or service.

b	means a nation can produce a unit of output using less resources than a trading partner.

c	was first expressed by Adam Smith.

d	exists only in theory, not in actual trade patterns.

e	does not explain which products will be imported and exported.

Answer 1

2) Reducing unemployment and other resource missallocations would not shift the PPF outward. (Option e, it would mean a movement towards a point on PPF)

3) Productive efficiency tells us the production choices available that fully use our resources. (Option b)

4) A country achieves allocative efficiency when it produces the combination of goods and services it values most highly. (Option a)

5) Comparative advantage is when one party has a lower opportunity cost than another in producing a good or service. (Option a)