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# Urgent - Help on microeconomics questions (university) watch

1. Hey,

I have a couple questions I am stuck on, you have to say true, false or uncertain and explain your answer.

Q1) The shape and position of the production possibility frontier are determined by the efficiency with which the resources of the economy are being used inproduction.

My answer: False; There are three types of PPF curves: Concave, convex and linear; the diagram above (I drew the PFF diagram) shows the most common curve (concave). The shape demonstrates increasing opportunity cost when it moves down the slope. If the opportunity cost is constant, the slope will be linear, if the opportunity cost is decreasing as you move down the slope, it will be convex, signalling economies of scale. Therefore the shape is determined by the opportunity cost not the efficiency.
The position on the other hand, is determined by the allocative efficiency of resources and technology or factors of production. Therefore this statement is false.

Q2) If the demand for personal computers shifts to the left, then the long runequilibrium price and quantity will both fall.

Uncertain: *Draws diagram to show a shift back in demand* In the short run, there will be a shift from D1 to D2, this would put downward pressures on price due to a contraction along the supply curve therefore the statement is true for the SHORT RUN, however, in the long run it is uncertain as we are unsure as to how the market will react e.g. the firms may reduce supply and move to producing a more profitable good.

Please can someone knowledgable to university standards confirm whether I am correct or not and whether my answers are good. They seem a bit long as I was told you only need 3/4 lines per answer alongside a graph if neccessary

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Updated: November 2, 2015
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