1.5 production possibility diagrams

Question 1

what do production possibility diagrams illustrate

Answer 1

recourse allocation
trade off’s
unemployment of economic recourses
economic growth

Question 2

draw a production possibility diagram

Answer 2

see notes

Question 3

difference between allocative and productive efficiency on a production possibility diagram

Answer 3

all points on the diagram are productively efficient - all factors of production being utilised
not all allocatively efficient as the combination needs to be correct for society, which is a specific point on the boundary

Question 4

why does the boundary on a production possibility diagram shift

Answer 4

there is economic growth - improvements in technological process or labour force which increases productive capacity