Which one of the following statements about production possibility frontier is not correct?
- A.The production possibility frontier slopes downwards to the right as the resources are limited.
- B.The different combinations of various goods and services given the available resources and technology are denoted by the production possibility frontier.
- C.Any point on or inside the production possibility frontier is attainable under the existing technology and resources.
- D.On the production possibility frontier, the output of one commodity can be increased without changing the output of another commodity.
Correct answer
Explanation
The correct answer is D. On the frontier all resources are already fully used, so more of one good can be produced only by giving up some of the other.
The production possibility frontier (PPF) is a curve showing the different combinations of two goods an economy can produce when it uses all its resources fully and efficiently with the existing technology. Points on the curve are efficient; points inside it are attainable but show unemployed or wasted resources; points outside it cannot be reached at present. Moving along the curve, extra output of one good always costs some output of the other, and that sacrifice is the opportunity cost.
A is correct: because resources are scarce, more of one good means less of the other, so the curve slopes downward.
B is correct: this is the very definition of the PPF.
C is correct: points on the curve and inside it can both be produced; only points outside cannot.
Exam tip: on the PPF = full and efficient use; inside = unemployment; outside = unattainable; the slope = opportunity cost.
Practice Questions
View allHow is the magnitude of price elasticity for an individual good determined? 1. By the degree to which the good is a necessity or luxury 2. By the extent to which substitutes are available 3. By the rate of income growth in the economy 4. By the relative importance of the good in the consumer's budget Select the correct answer using the code given below.
- A.1, 2 and 3
- B.1 and 4 only
- C.1, 2 and 4
- D.3 and 4
Show answer
The nature of the good, its substitutes and its share in the budget decide how strongly demand reacts to price; the growth of income in the economy does not.
Read the full explanation →Consider the following statements about the Rashtriya Gokul Mission :
I. It is important for the upliftment of rural poor as majority of low producing indigenous animals are with small and marginal farmers and landless labourers.
II. It was initiated to promote indigenous cattle and buffalo rearing and conservation in a scientific and holistic manner.
Which of the statements given above is/are correct?
- A.I only
- B.II only
- C.Both I and II
- D.Neither I nor II
Show answer
The Rashtriya Gokul Mission was launched to conserve and develop indigenous cattle and buffalo breeds scientifically, and it matters most to the small farmers and landless labourers who keep most of these animals.
Read the full explanation →Atal Innovation Mission is set up under the
- A.Department of Science and Technology
- B.Ministry of Labour and Employment
- C.NITI Aayog
- D.Ministry of Skill Development and Entrepreneurship
Show answer
The Atal Innovation Mission (AIM) was set up in 2016 by NITI Aayog as the Government of India's flagship programme to promote innovation and entrepreneurship.
Read the full explanation →Consider the following statements :
1. The Government of India provides Minimum Support Price for niger (Guizotia abyssinica) seeds.
2. Niger is cultivated as a Kharif crop.
3. Some tribal people in India use niger seed oil for cooking.
How many of the above statements are correct?
- A.Only one
- B.Only two
- C.All three
- D.None
Show answer
Nigerseed is one of the oilseeds covered by MSP, it is grown mainly in the kharif season, and tribal communities use its oil for cooking.
Read the full explanation →Why does the Government of India promote the use of 'Neem-coated Urea' in agriculture?
- A.Release of Neem oil in the soil increases nitrogen fixation by the soil microorganisms
- B.Neem coating slows down the rate of dissolution of urea in the soil
- C.Nitrous oxide, which is a greenhouse gas, is not at all released into atmosphere by crop fields
- D.It is a combination of a weedicide and a fertilizer for particular crops
Show answer
The neem layer releases nitrogen slowly, so crops take up more of it and less is lost. Plain urea dissolves fast and much of its nitrogen is lost by leaching into groundwater and as gases.
Read the full explanation →