2.2 The Production Possibilities Frontier and Social Choices Flashcards
What kind of slope does the PPF have and why>
Curved and is different at various point due to the law of diminishing returns.
absence of specific number of goods due to the uncertainty of resources
____ means that given the available inputs and technology it is not possible to produce more of one good without decreasing quantity that is produced of another good
productive efficiency
_______ means that the particular combination of goods and services on the production possibility curve that a society produces represents the combination that society most desires.
Allocative Efficiency
Only one of the ______ efficient choices will be the _____ efficient choice for society as a whole.
productively; allocatively
What two problems does the economy face in trying to expand consumption of all goods?
- discovering inefficient use of resources to improve efficiency and producing on the ppf
- As resources grow, the economy grows
What is the result of solving economic problems in hopes to expand consumption of goods?
The PPF for society will shift outward and society will be able o afford more of all goods.
What are two reasons for society having to choose between tradeoffs?
- Slow economic growth
2. Time taken in discovering and implementing productive efficiency
How does the government determine tradeoffs?
looking at where spending could do the most good and where reduction in spending would do the least harm.
How do individuals and firms determine tradeoffs?
Firms seek to produce goods and services in the quantity, quality, and price people want.`
How does comparative advantage apply to PPF and why>
A country determining production domestically vs. in another country.
-Because countries vary in production due to different climates, geography, technology, or skills.
_______ is when a country can produce a good at a lower opportunity cost than another country
comparative advantage
What is the benefit of trade?
manufacturers produce goods where opportunity cost is lowest,so total production increases benefitting trade
