1.1.4 PPF

Question 1

PPF

Answer 1

The maximum potential output combinations of two goods an economy can achieve with all resources are fully and efficiently employed

Question 2

Constant opportunity cost

Answer 2

Straight PPF - resources are equally efficient at producing both goods shown on PPF axes

Question 3

Increasing opportunity cost

Answer 3

Curved PPF

Question 4

Factors shifting PPF outwards

Answer 4

-Increase in quantity of factord of production e.g.migration
-Increase in the quality of factors of production e.g. training programs
-Advance in technology e.g. AI

Question 5

Factors shifting PPF inwards

Answer 5

-Decrease in quantity of factors of production e.g. war or natural disasters
-A decrease in the quality of factors of production e.g. loss of workers skills in a prolonged recession

Question 6

Capital good

Question 7

Consumer good