The PPC Model can be used to show:

• we must make choices
• choices have opportunity costs
• the law of increasing costs
• the effect of unemployment
• the effect of productive inefficiency
• the effect of economic growth
• how present choices affect future possibilities
• the effect of international trade
• The PPC does NOT show the optimum product mix (allocative efficiency)

MULTIPLE CHOICE

Refer to the graph. Which of the following combinations will be unattainable?

A. 9 power drills and 1 pair of skis
B. 7 power drills and 3 pairs of skis
C. 4 power drills and 1 pair of skis
D. 0 power drills and 4 pairs of skis

Refer to the graph. the opportuninty cost of the third pair fo skis is:

A. 0 power drills
B. 2 power drills
C. 3 power drills
D. 4 power drills

Refer to the graph. Why is the PPC concave to the origin?

A. because all costs in economics are opportunity costs
B. because if resources are limited society must make choices
C. because resources and technology are assumed to be fixed
D. because resources are not all the same

Refer to the graph. An increase in unemployment will cause:

A. the PPC to shift inwards
B. the PPC to shift outwards
C. economic growth
D. technological advances

Refer to the graph. If power drills represent capital resources and skis represent consumer goods, which point would result in the most economic growth in the future?

A. A
B. B
C. C
D. D
E. E

Refer to the graph. Which of the following may allow the economy to produce combination G in the future?

A. lower unemployment
B. international trade
C. achieving productive efficiency
D. achieving allocative efficiency

Refer to the graph. Which combination of power drills and skis is allocatively efficient?

A. A
B. B
C. C
D. D
E. E
F. we can't tell