1.4 production possibility curve (PPC) diagrams Flashcards
1
Q
definition of PPC
A
- curve that shows max output of 2 types of products
- and combo of products that can be produced
- with existing resources and tech
2
Q
what does a point under curve of PPC signify
A
- not full use of resources
- unemployed resources
3
Q
what does a point outside curve of PPC signify
A
- not enough resources to produce
- not currently attainable
4
Q
what does a constant PPC show
A
- opportunity cost is constant
- resources are equally suited to producing both types of products
5
Q
what does a bowed PPC show
A
- increasing opportunity cost
- best resources used first to produce product
6
Q
what causes shift in PPC
A
- change in quality/quantity of resources
7
Q
what does right shift of PPC do
A
- increase productive potential of country (capable of producing more)
8
Q
how to take advantage of increased productive potential
A
- extra/better quality resources must be employed
9
Q
what does a mvmt along ppc show
A
resources being reallocated
