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Understanding Production Possibilities Curve with Practice Questions

Learn how to interpret a production possibilities curve with real-world examples and practice questions for better understanding. Discover what "guns" and "butter" represent, opportunity cost when moving between points, graphic analysis, and more.

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Understanding Production Possibilities Curve with Practice Questions

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  1. Practicing with a graph and EOCT Questions Production Possibilities Curve

  2. What does “guns” represent? • What does “butter” represent? • When you move from point X to point Y, what are you gaining? • When you move from point X to point Y what is your opportunity cost?

  3. Use the following production possibilities curve to answer question number _1___: 1. Which statement is true about the graphic above? A      Moving from point X to point Y incurs an opportunity cost of guns. B       At point X, this country is producing more butter than guns. C      Moving from point X to point Y incurs and opportunity cost of butter. D      This country does not have to give up any guns to produce more butter.

  4. Use the following graph for question #_2__: 2. On the graph above, shifting production from 10 lbs of cheese to 20 lbs of cheese means an opportunity cost of A      1 gallon of milk. B       7 gallons of milk. C      10 pounds of cheese. D      20 pounds of cheese.

  5. key 1. A 2. A

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