1.5 Production possibility curves Flashcards
What does it mean if the point is on the line of the PPC?
All of the resources in the economy are fully employed.
What does it mean if the point is below the line of the PPC?
There is some unemployment of resources (there is excess capacity).
What does it mean if the point is above the line of the PPC?
impossible for this economy given its existing resources.
Why would a PPC shift?
The PPC will shift if the
country’s ability to produce goods
and services changes
When does a PPC pivot occur?
A pivot occurs when the
production possibility for
only one of the two
goods being compared
is increased.
What is a Production Possibility Curve (PPC)?
A graphical representation that shows the maximum combinations of two goods that can be produced with available resources and technology.
Fill in the blank: The PPC illustrates the concept of ________ in economics.
opportunity cost
What does it mean if the PPC shifts outward?
An increase in resources or improvements in technology.
What are the axes typically labeled with on a PPC?
The two different goods being produced.
What does the slope of the PPC represent?
The opportunity cost of one good in terms of the other.
What does a straight-line PPC indicate?
Constant opportunity costs between the two goods.
What happens to the PPC if a country experiences economic growth?
The PPC shifts outward.
What does an inward shift of the PPC indicate?
A decrease in resources or a decline in technology.
What is a ‘production inefficiency’ as represented on the PPC?
A point inside the PPC where resources are not fully utilized.
What is the impact of technological advancements on the PPC?
It can shift the PPC outward, allowing more production.
