1.1.4 Production Posibility Frontiers

Question 1

What is a PPF?

Answer 1

A curve showing the maximum number of goods and services that can be produced in a given period with finite resources

Question 2

What does Point A show on this PPF?

Answer 2

An economy that is being productively efficient. It is the maximum potential output of the economy.

Question 3

What is a capital good?

Answer 3

Goods used as part of the production process

Question 4

What are consumer goods?

Answer 4

Goods produced for consumption

Question 5

Is this economic growth or decline?

Answer 5

Growth

Question 6

Which point is an efficient and inefficient allocation or resources?

Answer 6

A and B = inefficent

C = efficient

Question 7

What point is unobtainable production?

Answer 7

Point B

Question 8

What causes a shift in the PPF?

Answer 8

A change in the productive capacity of the economy

Question 9

What causes movements along the PPF?

Answer 9

A change in the allocation of resources to produce more of a good, at the expense of less of the original good