Question: How is an opportunity cost of a decision examined?

Answer: by using a production graph

Question: What is an efficient economy?

Answer: one that uses its resources to make the most goods and services

Question: What causes the line on a production possibilities graph to curve?

Answer: because increasing costs results in an increasingly less output

Question: How is underutilization depicted on a production possibilities frontier?

Answer: Underutiliation is shown by any point that appears inside the production possibilities frontier

Question: How does a production possibilities curve illustrate how efficient an economy is?

Answer: a production possibilities curve shows the maximum possible output along a production possibilities frontier

Question: What would cause a production possibilities curve to move down and to the left?

Answer: a nation loses land after being defeated in a war

Question: What would happen if the government decided that Capeland’s economy should only produce watermelons?

Answer: There would be more watermelons than people wanted, and watermelon prices would drop. Meanwhile, people would pay large amounts of money for shoes.

Question: What impact does the law of increasing costs have on an economy?

Answer: When increases production of an item, the cost of producing the opportunity cost goes up.

Question: How does technology affect a nation’s production curve?

Answer: curve shifts to the right because of more skilled workers, thus increasing production.

Question: Limited quantities of resources to meet unlimited wants is a

Answer: Scarcity