1.5 PPF's/PPC's Flashcards
What can we work out from PPF’s/PPC’s? (4)
resource allocation
opportunity cost and trade-offs
unemployment of economic resources
economic growth.
What does a PPF/PPC show?
Shows different combinations of output for two products i.e good x and good y, given the resources available.
As the output of good x increases, the output of good y decreases.
What happens when production is on the curve?
All resources are being used and the producer is operating at the maximum rate production.
What happens when production is inside the curve?
Anywhere inside the curve shows under-use of resources or inefficiency.
Why can’t a producer produce outside the curve?
The producer doesn’t have enough resources to produce at that level.
What does a PPC show when the curve moves outwards?
Increased productive capacity meaning greater output levels can be achieved.
What factors could increase productive capacity? (4)
Increased immigration
Improvements in infrastructure
Increased education
Investment in capital
What does it mean if a PPC is a straight line?
The oppertunity cost is constant
Where on a PPC is most efficient?
On the line/curve
