3 Complete each sentence with the correct ending, a-I, below.

1 The production possibility frontier is drawn assuming that the economy

2 Diminishing returns

3 The production possibility curves

4 A trade-off is a process of deciding whether to give up some units of one good or one

5 Transferring workers from film to food industry, the economy

6 PPFs of different economies

A show a menu of possible outputs of goods that can be produced in the economy.

B objective to obtain more of another.

C has a fixed amount of resources (including labour, materials and capital).

D produces more food at the expense of producing less films.

E illustrate a condition that occurs when each additional unit of input adds less to total output.

F has unlimited opportunities to produce nation´s welfare.

G produces more films at the expense of producing less food.

H show their individual production opportunities.

I opportunity to give up some other products.

4. Complete the text using the words below (there are some extra words)

a composite, factors, rates, available, attainable, effectively, maximum, freely

In Economics, a production possibility curve, is a graph that shows the different (1____________) of production of two goods and/or services that an economy can produce (2_______________) during a specified period of time with a limited quantity of productive resources, or (3_________________) of production. The PPF shows the (4_________________) amount of one commodity that can be obtained for any specified production level of the other commodity (or (5________________) of all other commodities), given the society's technology and the amount of factors of production (6______________________).

5 Fill in the missing words to complete the table: you can check your answers in a dictionary.

verb	noun	adjective
1	production	2
satisfy	3	4
5	6	additional
consider	7	8
employ	9	10
11	assumption	12
reduce	13	14

Text 2 The production possibility frontier

1 Which paragraph contains the following information?

1 Efficient and inefficient production points.

2 Impossible output combinations.

3 The point at which the economy has spare resources.

4 The society faces the problem of scarce resources.

5 Feasible combinations of outputs.

6 The society decides what and how to produce.

2. Do the following statements agree with the information given in the text?

Use TRUE if the statement agrees with the information

FALSE if the statement contradicts the information

NOT GIVEN if there is no information on this

1 At point G, the economy is not using its resources effectively since it could have more of food only.

2 A feasible combination of output is sometimes inefficient.

3 All points on the curve ensure efficient production combinations.

4 The points that lie outside the PPF can be unattainable but efficient with the given amount of resources.

5 Scarcity of resources makes the society choose between points on and inside the PPF.

6 Choosing a point on the PPF the society answers the questions how and for whom to produce.

7 Point H can be reached if the society finds additional resources.