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Tutorial 2- Questions

The document outlines a tutorial for ECON101, focusing on the Production Possibilities Frontier (PPF) and its implications for scarcity, opportunity cost, and allocative efficiency. It includes written questions, graphical analysis, and multiple-choice questions related to the PPF and economic principles. The tutorial aims to deepen understanding of resource allocation and production efficiency in economics.

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20 views2 pages

Tutorial 2- Questions

The document outlines a tutorial for ECON101, focusing on the Production Possibilities Frontier (PPF) and its implications for scarcity, opportunity cost, and allocative efficiency. It includes written questions, graphical analysis, and multiple-choice questions related to the PPF and economic principles. The tutorial aims to deepen understanding of resource allocation and production efficiency in economics.

Uploaded by

kalaciagovender14
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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ECON101

TUTORIAL 2-2024

PART A- WRITTEN QUESTIONS


1. Define what production possibilities frontier (PPF) is.

2. How does the Production Possibilities Frontier illustrate scarcity?

3. How does the PPF illustrate opportunity cost?

4. What is allocative efficiency and how does it relate to the PPF?

5. What conditions should be satisfied if resources are used efficiently?

PART B- GRAPH QUESTION

6. Briefly explain the difference between point C and D. What are the implications of
producing at these points?

7. What is the economic reason for a bowed outwards (Concave) shape of the above
PPF?

THE PPF
POSSIBILITY Pizza Cooldrink
(Hundreds) (Hundreds)
A 1 20
B 2 18
C 3 15
D 4 10
E 5 3

8. a) If this economy were to produce 3 (Pizza) and 15 (Cooldrink) what type of


production will this economy be experiencing?
b) As this economy increases the production of (Pizza) along the production
possibilities frontier, what happens to the opportunity cost of (Cooldrink)?

PART C – MCQ’S
9. A production possibilities frontier;
a) Defines a boundary between what we need and what do we not need.
b) Shows a combination of two activities that are attainable with given resources.
c) Involves a tradeoff between what we want and what we need.
d) Identifies the combination of two activities that we should produce.
e) Shows resources that should be used efficiently.

10. . If an economy is productively efficient:


a) everyone is wealthy.
b) resources are unemployed.
c) more of one product can only be produced if less of another product is
produced.
d) the distribution of income is equal.
e) None of the above is correct.

11. The principle of diminishing marginal returns implies that:


a) Additional benefit from one more unit of a good or service remains constant as
more is consumed.
b) Additional benefit from obtaining one more unit of a good or service increases
as more is consumed.
c) Additional benefit from obtaining one more unit of a good or service decreases
as more is consumed.
d) Total benefit from obtaining more of a good or service decreases as more is
consumed.
e) Marginal benefit should equal marginal cost.

12. Marginal benefit is:


a) The opportunity cost of producing one more unit of a good and increases as
production of the good increases.
b) The opportunity cost of producing one more unit of a good and decreases as
production of the good increases.
c) The benefit from consuming one more unit of a good and increases as
production of the good increases.
d) The benefit from consuming one more unit of a good and increases as
production of the good increases.
e) None of the above.

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