1.1.4

Question 1

What does a PPF show?

Answer 1

The possible output combinations of good A and good B with available technology and resources.

Question 2

How is opportunity cost shown on a PPF?

Answer 2

It’s shown by the out combinations displayed on the graph.

5 and 0
4 and 1
3 and 2
2 and 3
1 and 4
0 and 5

Question 3

How is productive efficiency shown on a PPF?

Answer 3

At any point on the actual PPF curve.

Question 4

How is possible and unobtainable production shown on a PPF?

Answer 4

Possible production
- Anywhere underneath the PPF curve

Unobtainable production
- Anywhere above the PPF curve

Question 5

How is economic growth shown on a PPF?

Answer 5

Economic growth
- Shown when the PPF shifts outwards

Economic decline
- Shown when the PPF shifts inwards

Question 6

What the term for the difference between actual growth and potential growth on a PPF?

Answer 6

Negative output gap.

Question 7

Name 3 things that cause a shift on the PPF

Answer 7

• Better quality of resources
• More quantity of goods
• Better technology

Question 8

What are consumer goods?

Answer 8

These are goods that directly satisfy the needs and want of the consumer.

Question 9

What are capital goods?

Answer 9

These are goods and services that are used to produce consumer goods.