1.1.4 PPFs

Question 1

What does the PPF curve show

Answer 1

-Graphical representation of maximum production potential given its resources and technology
-Trade-off between producing different combinations of 2 goods/services

Question 2

Economic growth or decline

Answer 2

-Growth depicted by shift of PPF curve outward - increase in productive capacity
-Decline depicted by shift inward - reduction in productive capacity

Question 3

Efficient or inefficient allocation of resources

Answer 3

-Points on the curve depict efficient resource allocation
-Inside curve depict inefficiency - resources underutilised

-Points beyond curve are unattainable without changes in resources/technology

Question 4

Capital vs consumer goods

Answer 4

Capital:
-Used to produce other goods and services
-Machinery, infrastructure, factories, tech
-Investment in these goods can lead to growth and development

Consumer:
-Items purchased for personal use and consumption
-Clothing, food, electronics
-Satisfies immediate needs and wants