In the graph, moving from point A to point B means that A PPC for wheat (tonnes) and cloth (lakh metres), bowed out from the origin, from 45 lakh m of cloth with no wheat to 50 tonnes of wheat with no cloth. Point A (20 wheat, 15 cloth) lies inside the curve, point B (40 wheat, 27 cloth) lies on it, and point C (45 wheat, 40 cloth) lies outside it.

In the graph, moving from point A to point…

In the graph, moving from point A to point B means that

Question 32

MediumOriginal question

In the graph, moving from point A to point B means that

A PPC for wheat (tonnes) and cloth (lakh metres), bowed out from the origin, from 45 lakh m of cloth with no wheat to 50 tonnes of wheat with no cloth. Point A (20 wheat, 15 cloth) lies inside the curve, point B (40 wheat, 27 cloth) lies on it, and point C (45 wheat, 40 cloth) lies outside it.

more of both goods is produced without giving up anything, by using idle resourcesCorrect answerYour answermore wheat is produced only by giving up clothCorrect answerYour answerthe PPC has shifted outwardCorrect answerYour answerthe economy now produces less of both goodsCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

From A (20, 15) to B (40, 27) wheat rises by 20 tonnes and cloth by 12 lakh m.
Nothing is sacrificed because A had idle resources; there is no opportunity cost for this move.

Worth noting

A trade-off exists only between points on the curve; from inside it, both can rise.

Concept: Moving from inside to the PPC
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe production possibility curve

Practise this chapter →

Ten questions from Central Problems & the PPC, at your own pace.

Practise this chapter →

Ten questions from Central Problems & the PPC, at your own pace.

In the graph, moving from point A to point B means that

Question 32

Explanation