PrepGo

AP Microeconomics Practice Quiz: Production Possibilities Curve

Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026

Test your understanding with short quizzes. This quiz has 12 questions to check your progress.

Question 1 of 12

The Production Possibilities Curve (PPC) is a model primarily used to illustrate which of the following economic concepts?

All Questions (12)

The Production Possibilities Curve (PPC) is a model primarily used to illustrate which of the following economic concepts?

A) The relationship between price and quantity demanded for a single product.

B) The trade-offs associated with allocating scarce resources.

C) The total monetary value of all goods and services produced in an economy over a year.

D) The stages of a business cycle, including expansion and recession.

Correct Answer: B

According to the provided content, 'The PPC is a model used to show the trade-offs associated with allocating resources.' It demonstrates the choices an economy faces when producing two different goods with limited resources.

A point located on the Production Possibilities Curve represents a combination of goods that is:

A) Unattainable with current technology and resources.

B) Inefficient, with some resources being underutilized.

C) Efficient, meaning all resources are fully and efficiently employed.

D) Possible only if the economy experiences economic contraction.

Correct Answer: C

The provided content explains that the PPC illustrates efficiency. Any point on the curve represents a production level where resources are fully and efficiently utilized to produce the maximum possible output.

An economy is producing at a point inside its Production Possibilities Curve. This indicates that:

A) The economy is experiencing economic growth.

B) The economy is operating with underutilized resources or inefficiency.

C) The opportunity cost of production is zero.

D) The economy has exceeded its production possibilities.

Correct Answer: B

The content states that the PPC can illustrate inefficiency and underutilized resources. A point inside the curve signifies that the economy is not producing at its maximum potential, which is a sign of inefficiency or unemployed resources.

A Production Possibilities Curve that is a straight line, rather than bowed outwards, demonstrates which of the following?

A) Increasing opportunity costs.

B) Decreasing opportunity costs.

C) Constant opportunity costs.

D) Zero opportunity cost.

Correct Answer: C

As stated in the content, 'The shape of the PPC depends on whether opportunity costs are constant, increasing, or decreasing.' A straight-line PPC indicates that the opportunity cost of producing one more unit of a good is constant, meaning the resources are perfectly adaptable between the production of the two goods.

Which of the following events would most likely cause an economy's Production Possibilities Curve to shift outward?

A) A decision to produce more consumer goods and fewer capital goods.

B) A decrease in the unemployment rate.

C) A widespread improvement in technology and productivity.

D) A natural disaster that destroys a significant portion of the capital stock.

Correct Answer: C

The content specifies that the 'PPC can shift due to changes in factors of production as well as changes in productivity/technology' and that 'Economic growth results in an outward shift of the PPC.' An improvement in technology increases an economy's productive capacity, resulting in economic growth and an outward shift of the curve.

An inward shift of the Production Possibilities Curve, representing economic contraction, could be caused by:

A) An increase in the labor force.

B) A movement from a point on the curve to a point inside the curve.

C) A decrease in the availability of a key factor of production.

D) An increase in consumer demand for both goods.

Correct Answer: C

According to the content, the PPC illustrates economic contraction and can shift due to changes in factors of production. An inward shift signifies a decrease in an economy's maximum productive capacity, which would be caused by a reduction in resources, such as labor, capital, or natural resources.

Consider the following production possibilities table for an economy producing cars and computers. What is the opportunity cost of increasing computer production from 20 to 30 units? | Combination | Cars | Computers | |---|---|---| | A | 50 | 0 | | B | 45 | 10 | | C | 35 | 20 | | D | 20 | 30 | | E | 0 | 40 |

A) 10 computers

B) 15 cars

C) 20 cars

D) 35 cars

Correct Answer: B

The content requires the ability to 'Calculate opportunity cost.' To increase computer production from 20 (Combination C) to 30 (Combination D), the production of cars must decrease from 35 to 20. The opportunity cost is the number of cars given up, which is 35 - 20 = 15 cars.

The concept of opportunity cost is illustrated by a movement between two points on a given Production Possibilities Curve. This movement signifies that:

A) Producing more of one good requires producing less of the other.

B) The economy's productive capacity has grown.

C) The economy has become less efficient.

D) The factors of production have increased.

Correct Answer: A

The content explains that the PPC illustrates opportunity costs and trade-offs. Moving along the curve means reallocating resources. To gain more of one product, society must give up some of the other product, which is the definition of opportunity cost.

A bowed-out or concave shape of the Production Possibilities Curve is the result of:

A) Underutilized resources.

B) Constant opportunity costs between the two goods.

C) Increasing opportunity costs as more of one good is produced.

D) Economic growth in one sector of the economy.

Correct Answer: C

The content states that 'The shape of the PPC depends on whether opportunity costs are constant, increasing, or decreasing.' A bowed-out shape specifically illustrates increasing opportunity cost, meaning that resources are not perfectly adaptable, and as production of one good increases, successively larger amounts of the other good must be sacrificed.

Which of the following fundamental economic concepts is illustrated by the area of unattainable production combinations that lies outside the Production Possibilities Curve?

A) Efficiency

B) Trade-offs

C) Scarcity

D) Economic Growth

Correct Answer: C

The content notes that the PPC can be used to illustrate the concept of scarcity. The curve itself shows the maximum possible production, so the area outside the curve represents combinations that are impossible to produce with the current limited resources, which is the definition of scarcity.

An economy produces wheat and electronics. A new fertilizer is invented that dramatically increases the output of wheat per acre but has no effect on electronics production. How will this change affect the economy's Production Possibilities Curve?

A) The PPC will shift inward.

B) The PPC will make a parallel shift outward.

C) The PPC will pivot outward from the electronics axis, increasing the maximum quantity of wheat.

D) The PPC will not change, but the economy will move to a new point on the curve.

Correct Answer: C

According to the content, the PPC shifts due to changes in productivity/technology. Since the technological advance only affects wheat production, the maximum potential output of wheat increases, while the maximum potential output of electronics remains unchanged. This causes the curve to pivot or rotate outward along the wheat axis.

Economic growth is explicitly represented on a Production Possibilities Curve diagram as:

A) A movement from a point inside the curve to a point on the curve.

B) A movement along the curve from one point to another.

C) An outward shift of the entire curve.

D) A point located outside the current curve.

Correct Answer: C

The provided content clearly states, 'Economic growth results in an outward shift of the PPC.' This shift indicates that the economy's overall productive capacity has increased, allowing it to produce more of both goods than was previously possible.