Questions on PPFs
Questions 1-3 are based on the following PPF schedule.
Consider the information on Utopia, a hypothetical economy
that can produce either rice, or beans from its scarce
resources. The figures are in tonnes.
1. Plot the PPF for Utopia, with rice on the Y-Axis, and beans on the X-
axis.
2. What is the opportunity cost of increasing production of rice from
30m tons to 40m?
3. Comment on the situation experienced by Utopia if it produces 50m
tonnes of rice and 50m of beans.
Questions 4-6 are based on the following PPF schedule. Consider
the information for a small pacific island economy that can produce
either tea or oranges. The figures are in thousands of kilos.
Tea Oranges
100 0
90 42
80 76
70 105
60 128
50 146
40 160
30 170
20 178
10 185
0 190
4. Plot the PPF for this economy, with tea on the Y-Axis, and oranges
on the X-axis.
5. What is the opportunity cost to this economy of producing 185 units
(000 kilos) of oranges?
6. Use economics analysis to explain why a typical PPF is non-linear (it
is bowed outwards from the origin).
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For questions 7-12, look at the graph below. Are the
following statements true or false?
7. R has the lowest level of unemployment.
8. N is currently not achievable.
9. A movement from M to L has an opportunity cost of C2 - C3.
10. As more capital goods are produced the opportunity cost falls.
11. A movement from R to S is impossible.
12. T would have the lowest standard of living in the short run. M
creates the highest standard of living in the long run.
Questions 13-14 will test your understanding of how PPFs
are used to explain growth and negative growth.
13. Briefly explain the difference between ‘actual’ and ‘potential’
growth.
14. Taking the example of the floods in Pakistan in 2022, illustrate
the effect of the flooding using a PPF. Use agriculture as the industry
on the Y axis, and manufacturing as the industry on the X axis.
Question 1
Look at the PPF and decide whether the statements that follow are true or
false:
1. R has the lowest level of unemployment.
2. N is currently not achievable.
3. A movement from M to L has an opportunity cost of C2 to C3.
4. As more capital goods are produced the opportunity cost falls.
5. A movement from R to S is impossible.
6. T is likely to have the lowest standard of living in the short run.
7. M is likely to have the highest standard of living in the long run.
Question 2
Production possibilities
Consider the information on Utopia, a hypothetical economy that can produce either rice or beans
using all its scarce resources. The figures are in tonnes.
1. Plot the PPF for Utopia, with rice on the Y-Axis, and beans on the x-axis.
2. What is the opportunity cost of increasing production of rice from 30m
tonnes to 40m?
3. Comment on the situation experienced by Utopia if it produces 50m
tonnes of rice and 50m of beans.
