1.14, 1.2.2, 1.2.4 - ppf, div labour, supply Flashcards
What is a ppf
shows the maximum potential output of a combination of goods and services an economy can produce when all its resources are being used efficiently.
All points on a ppf curve are…
economically efficient as all available resources are used efficiently.
What causes shifts in the ppf curve (4 reasons)
Advances in technology
Increase investment
More/Better training/education
increased amount of resources
What causes movements along the ppf curve
due to a reallocation of resources by the government
Why does the demand curve slope downwards
Demand curve slopes downward because there is an inverse relationship between the price of a good or service and the quantity demanded of that good or service.
What is division of labour
Breaking down the production process into separate tasks. (often followed by specialisation)
What are the advantages and disadvantages of specialization
Advantages:
Higher output
Better quality
Better productivity
Disadvantages:
Changes in fashion/trends
Reliant on finite resources
What are the advantages and disadvantages of divison of labour
Advantages:
Lower price for consumers and better quality
Workers very efficient and highly productive
Disadvantages:
Workers demotivated
Risk of long term unemployment through over specialisation
When price decreases, quantity demanded will increase. What is this called
An extension of demand
When price increases, quantity demanded will decrease. What is this called
A contraction in demand
What is supply
The quantity of a good or service producers are willing and able to produce at a given price in a given period of time.
Why does the supply curve slope upwards
because there is a direct relationship between price and quantity supplied, as price increases so does quantity supplied.
What are the factors that shift the demand curve (7)
Population
Advertising
Substitutes price
Income
Fashion
Complements price
Interest price
What are the factors that shift the supply curve (7)
Productivity
Indirect tax
Number of firms
Technology
Subsidies
Weather
Costs of production
