Question : Statement 1: The production possibilities curve (PPC) represents the maximum combination of goods that can be produced in an economy. Statement 2: Points inside the PPC represent efficient resource allocation.
Option 1: Statement 1 is true, and statement 2 is false.
Option 2: Statement 1 is false, and statement 2 is true.
Option 3: Both statements 1 and 2 are true.
Option 4: Both statements 1 and 2 are false.
Correct Answer: Statement 1 is true, and statement 2 is false.
Solution : The correct answer is (a) Statement 1 is true, and statement 2 is false.
Statement 1 is true: The production possibilities curve (PPC) represents the maximum combination of goods that can be produced in an economy, given its available resources and technology.
Statement 2 is false: Points inside the PPC represent inefficient resource allocation because the economy is not utilizing its resources to their full potential. Points on the PPC represent efficient resource allocation, while points outside the PPC are unattainable given the current resources and technology.
Therefore, statement 1 is true, but statement 2 is false.
Question : Statement 1: Staffing ensures effective allocation of human resources.
Statement 2: Staffing has no impact on resource allocation.
Question : Statement 1: The PPC illustrates the concept of opportunity cost.
Statement 2: As an economy produces more of one good, the opportunity cost of producing those goods decreases.
Question : Statement 1: The marginal rate of transformation (MRT) indicates the opportunity cost of producing one more unit of a good in terms of the other good.
Statement 2: The MRT is constant along the PPC, assuming a linear production possibilities curve.
Question : Statement 1: For efficient analysis and interpretation, the financial accounting data is categorised and codified. Statement 2: The accounts are categorised according to their nature.
Question : Statement 1: The marginal rate of transformation (MRT) measures the rate at which one good can be exchanged for another along the PPC.
Statement 2: The MRT is constant along the entire PPC.
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