1.1.4 Flashcards

Production possibility frontiers

1
Q

Production possibility frontier

A

A curve showing the maximum attainable quantities of different combinations of goods and services that can be produced in a set time period given the available resources and current state of technology

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2
Q

Capital goods

A

Goods that are used in the production of other goods and services

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3
Q

Consumer goods

A

Goods and services that are used by people to satisfy their needs and wants

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4
Q

Margin

A

A possible point of change eg. one more unit or one less unit

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5
Q

Marginal cost

A

The extra cost of producing one more unit of output

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6
Q

Long run economic growth

A

An increase in productive potential illustrated by an outward shift in a macro PPF

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7
Q

Causes of long run growth/outward shift of macro PPF

A

Increase in the quantity of factors of production (eg. migration or more capital through investment) or increase in quality of resources (eg. through education and training)

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8
Q

Possible cause of inward shift of PPF

A

Destruction of infrastructure due to conflict, outward migration of labour, impact of climate change on agriculture

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9
Q

Unemployment

A

A point inside the boundary where not all available resources are being used

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10
Q

Productive efficiency

A

Every point on the boundary is this type of efficient. Productive efficiency (in this context) means a given set of resources produces the maximum number of goods

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11
Q

Allocative efficiency

A

Perhaps only one point is this type of efficient - it is when an economy is producing the foods and services people most want and social welfare is maximised

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