These are original Marlbridge practice questions, not past exam questions. They use Valdoria and Kestria, two fictional countries; all data are fictional. The rubrics are a suggested Marlbridge rubric to help you check your work; they are not an official scoring guideline. Assumptions: resources and technology are fixed unless a question says otherwise; where a PPC is described as a straight line, opportunity cost is constant; a four-function calculator is enough.
Question 1 (multiple choice · foundation)
Valdoria is producing at a point inside its production possibilities curve. Which statement is correct?
- (A) Valdoria has unemployed or badly used resources and could produce more of at least one good without producing less of the other.
- (B) Valdoria is producing efficiently, because every point below the curve can be reached.
- (C) Valdoria’s PPC has shifted inward.
- (D) Valdoria cannot produce this combination with its current resources and technology.
Answer and explanation
Answer: (A). A point inside the PPC is inefficient. Some resources are idle or poorly used. Moving to the curve would give more of one or both goods with no opportunity cost.
- (B) confuses “attainable” with “efficient”. Points inside are attainable but waste resources; only points on the curve are efficient.
- (C) confuses a point inside the curve with a shift. The economy still has the same resources, so the curve has not moved.
- (D) describes a point outside the curve, which is unattainable.
Question 2 (multiple choice · core)
The table shows points on Valdoria’s PPC for laptops and wheat.
| Laptops (thousands) | 0 | 5 | 10 | 15 | 20 | 25 |
|---|---|---|---|---|---|---|
| Wheat (thousand tonnes) | 50 | 47 | 41 | 32 | 20 | 0 |
What is the opportunity cost per laptop of increasing laptop production from 10 thousand to 15 thousand?
- (A) 0.56 tonnes of wheat
- (B) 1.2 tonnes of wheat
- (C) 1.8 tonnes of wheat
- (D) 9 tonnes of wheat
Answer and explanation
Answer: (C). Wheat falls from 41 to 32 thousand tonnes, so 9 thousand tonnes are given up. Laptops rise by 5 thousand. Per laptop: 9 ÷ 5 = 1.8 tonnes of wheat.
- (A) inverts the ratio: 5 ÷ 9 = 0.56. That is the opportunity cost of a tonne of wheat measured in laptops (0.56 laptops), not the cost of a laptop.
- (B) is the average cost of all 15 thousand laptops from zero: (50 − 32) ÷ 15 = 1.2. The question asks about the extra 5 thousand laptops only.
- (D) is the total amount given up for the 5 thousand laptops, 9 thousand tonnes. Treating it as 9 tonnes per laptop forgets to divide by the 5 thousand laptops gained.
Question 3 (multiple choice · core)
Which of the following would most likely shift Valdoria’s PPC inward?
- (A) An earthquake destroys many factories, roads and power stations.
- (B) A recession causes the unemployment rate to rise.
- (C) Valdoria decides to produce more capital goods and fewer consumer goods this year.
- (D) Consumers decide they want more rice and fewer bicycles.
Answer and explanation
Answer: (A). The earthquake destroys capital, one of the factors of production. With fewer resources, Valdoria’s maximum possible output falls, so the PPC shifts inward (contraction).
- (B) moves the economy to a point inside the curve. The unemployed workers still exist, so capacity is unchanged.
- (C) is a movement along the curve this year. If anything, the extra capital goods will shift the PPC outward in the future.
- (D) changes which point on the curve is chosen, a movement along the curve. Preferences do not change what the economy is able to produce.
Question 4 (multiple choice · core)
Kestria’s PPC for two goods is a straight line. What does this tell you?
- (A) Kestria’s resources are equally suited to producing both goods, so the opportunity cost of each good is constant.
- (B) The opportunity cost of each good rises as more of it is produced.
- (C) Kestria can produce more of one good without giving up any of the other.
- (D) The opportunity cost of each good falls as more of it is produced.
Answer and explanation
Answer: (A). A straight line has the same slope everywhere, so each extra unit of one good always costs the same amount of the other. This happens when resources can be switched between the goods without becoming more or less productive.
- (B) describes increasing opportunity cost, which gives a PPC bowed outward from the origin.
- (C) is true only when moving from a point inside the PPC to the curve. Along any PPC, more of one good means less of the other.
- (D) describes decreasing opportunity cost, which gives a PPC bowed inward towards the origin.
Question 5 (calculation · core)
A Valdorian bakery can bake either 300 loaves or 120 cakes in a day, or any combination on the straight line between these two points.
(a) Calculate the opportunity cost of 1 cake and of 1 loaf. (b) Can the bakery produce 200 loaves and 50 cakes in a day? Show your working. (c) The bakery actually produces 150 loaves and 50 cakes. Is it producing efficiently? What is the opportunity cost of baking 10 more cakes from this point?
Worked solution
(a) 300 loaves are given up for 120 cakes. 1 cake = 300 ÷ 120 = 2.5 loaves. 1 loaf = 120 ÷ 300 = 0.4 cakes.
(b) 50 cakes cost 50 × 2.5 = 125 loaves, so the most loaves possible with 50 cakes is 300 − 125 = 175. 200 loaves is more than 175, so the combination is unattainable (outside the PPC).
(c) With 50 cakes the bakery could make 175 loaves, but it makes only 150, so it is inefficient (inside its PPC). With 150 loaves it could make (300 − 150) ÷ 2.5 = 60 cakes. So it can bake 10 more cakes, reaching 60, and still make 150 loaves. The opportunity cost of those 10 cakes is zero: it uses idle resources.
Suggested mark points (4): 1 for 2.5 loaves per cake and 0.4 cakes per loaf; 1 for 175 loaves and the conclusion “unattainable”; 1 for identifying the inefficient point with a supporting comparison; 1 for an opportunity cost of zero, explained by idle resources. A student who says the 10 cakes cost 25 loaves earns the first three points only: that is the cost on the curve, not from a point inside it.
Question 6 (constructed response · core)
Valdoria produces capital goods and consumer goods. Its resources are not equally suited to producing both.
(a) Draw a correctly labelled PPC for Valdoria, with capital goods on the horizontal axis and consumer goods on the vertical axis. Show the shape that matches the information above. Label a point A on the curve. (b) A recession leaves many workers unemployed. Label a point B on your graph that could show Valdoria’s output during the recession. (c) Valdoria moves from point A to a point C on the same curve with more capital goods. Identify the opportunity cost of this move. (d) Explain how the choice of point C is likely to affect Valdoria’s PPC in the future. Show this on your graph. (e) Instead, suppose a new technology raises output of consumer goods by the same percentage at every point, with no change for capital goods. Describe how the PPC changes, and state whether the opportunity cost of a capital good, measured in consumer goods, rises or falls at a given quantity of capital goods. Explain.
Model answer and suggested Marlbridge rubric
(a) A curve bowed outward from the origin (concave), meeting both axes. Horizontal axis “Capital goods”, vertical axis “Consumer goods”, curve labelled “PPC”. Bowed outward because resources are not equally suited, so opportunity cost increases. Point A on the curve.
(b) Point B anywhere inside the curve. Unemployed workers mean the economy produces less than it could.
(c) The opportunity cost is the consumer goods given up: the fall in consumer goods from A to C.
(d) More capital goods (machines, factories, roads) add to Valdoria’s stock of capital, a factor of production. With more capital, the economy can produce more of both goods in the future, so the PPC shifts outward. On the graph: a second, larger curve outside the first, labelled for example “PPC future”.
(e) The consumer-goods intercept moves up; the capital-goods intercept stays the same. The curve pivots outward along the consumer-goods axis. At any given quantity of capital goods, every consumer-goods amount on the curve is now larger by the same percentage, so the curve is steeper there. The opportunity cost of a capital good rises: the resources moved into making one more capital good would now have produced more consumer goods.
| Point | What earns it |
|---|---|
| 1 | Correctly labelled axes and a bowed-out PPC with point A on it |
| 1 | Point B inside the PPC |
| 1 | Opportunity cost of A → C identified as the consumer goods given up |
| 1 | Outward shift of the PPC shown on the graph |
| 1 | Explains that more capital goods increase the factors of production (capacity) |
| 1 | Pivot outward along the consumer-goods axis only, capital-goods intercept unchanged |
| 1 | Opportunity cost of a capital good rises, because the same resources now give up more consumer goods |
A straight-line PPC in (a) loses the first point, because the question says resources are not equally suited. In (c), “money” or “capital goods” does not earn the point. In (d), the shift must be outward and linked to more capital, not just “growth”.
Question 7 (constructed response · stretch)
Kestria’s creative studios can produce films and video games. The table shows points on their PPC.
| Point | Video games | Films |
|---|---|---|
| P | 0 | 60 |
| Q | 10 | 36 |
| R | 20 | 16 |
| S | 30 | 0 |
(a) Calculate the opportunity cost of one video game, in films, for each move: P → Q, Q → R and R → S. (b) Describe the shape of this PPC and the type of opportunity cost it shows. Suggest one reason why the studios might have this kind of opportunity cost. (c) Classify each combination as efficient, inefficient or unattainable: (20 games, 20 films) and (10 games, 30 films). Explain each. (d) Explain why most PPCs for a whole economy are drawn bowed outward instead.
Model answer and suggested Marlbridge rubric
(a) P → Q: (60 − 36) ÷ 10 = 2.4 films per game. Q → R: (36 − 16) ÷ 10 = 2.0 films. R → S: (16 − 0) ÷ 10 = 1.6 films.
(b) Each extra game costs fewer films than the one before, so this is decreasing opportunity cost. The PPC is bowed inward (convex to the origin). A possible reason: as the studios make more games, staff build skills and the fixed cost of game engines and equipment is spread over more output, so moving resources into games becomes more productive.
(c) (20, 20) is unattainable. At 20 games the most films possible is 16 (point R), and 20 > 16. (10, 30) is inefficient. At 10 games the studios could make 36 films (point Q), but only 30 are made, so some resources are idle or badly used.
(d) In a whole economy, resources are usually specialised: some land, workers and machines are much better at one good than the other. As output of one good rises, the economy has to move resources that are less and less suited to it, so each extra unit costs more of the other good. This increasing opportunity cost makes the curve bowed outward.
| Point | What earns it |
|---|---|
| 1 | All three opportunity costs correct (2.4, 2.0, 1.6 films per game) |
| 1 | Decreasing opportunity cost with a bowed-inward shape |
| 1 | A plausible reason for decreasing opportunity cost |
| 1 | Both combinations correctly classified with a comparison to the table |
| 1 | Links specialised resources to increasing opportunity cost and a bowed-out curve |
Accept costs carried forward from an error in (a) in part (b). Do not assume points between rows of the table in (c); the two combinations are chosen so that only table values are needed.
How did you do?
- Q1 or Q7(c) wrong: re-read the definitions and Worked example 1(d) in the study guide.
- Q2, Q5 or Q7(a) wrong: revisit “Calculating opportunity cost” and check which number goes on top.
- Q4 or Q7(b), (d) wrong: revisit “Why the shape depends on opportunity cost”.
- Q3 or Q6 wrong: revisit “Shifts of the PPC: growth and contraction” and Worked example 2.
Then tick off the topic checklist.