Question : Economy will operate on Production Possibility Frontier (PPF) only when resources are ______.

Option 1: Fully and efficiently utilised.

Option 2: Not fully and efficiently utilised 

Option 3: not operate at any point outside

Option 4: None of these

Question : Which of the following statements is correct regarding the production possibility frontier?

I. It gives the combinations between two goods that can be produced when the resources of the economy are fully utilised.

II. It illustrates the production possibilities of the economy.

Option 1: Only I

Option 2: Only II

Option 3: Both I and II

Option 4: Neither I nor II

Question : In case of an underemployment equilibrium, which of the following alternative is not true?

Option 1: Aggregate demand is equal to Aggregate supply
 

Option 2: There exist excess production capacity in the economy
 

Option 3: Resources are not fully and efficiently utilized

Option 4: Resources are fully and efficiently utilized

Question : Assumptions for Production Possibility Curve is/are:

Option 1: The amount of resources in an economy is fixed

Option 2: With the help of given resources, only two goods can be produced

Option 3: Resources are not fully equally efficient in production of all products.

Option 4: All of the above

Question : Market failure occurs when:

Option 1: Markets allocate resources efficiently
 

Option 2: Markets allocate resources inequitably
    

Option 3: Markets fail to allocate resources efficiently

Option 4: Markets fail to allocate resources inequitably

Question : Why does Production Possibility Curve slope downward?

Option 1: More of one good can be produced only by taking resources away from the production of another good.

Option 2: Less of one good can be produced only by taking resources away from the production of another good.

Option 3: More of one good can not be produced only by taking resources away from the production of another good.

Option 4: None of the above