4.1.1 Economic methodology and the economic problem

Question 1

What do production possibility diagrams illustrate (；一_一) (PPF)

Answer 1

Resource allocation, opportunity cost, trade-offfs, unemployment of resources, and economic growth → (outward shift)

Question 2

Where is production efficiency on a production possibility diagram ☜(⌒▽⌒)☞

Answer 2

All points on the diagram, productive efficency meaning all resources are fully utilized for max output

Question 3

Why aren’t all points on the boundary allocatively efficient ◔̯◔

Answer 3

Allocative efficency is producing the combination of the (2) goods most desired. This does not align with all points on the boundary (curved line)

Question 4

What does the production possibility boundary show ｡◕‿◕｡

Answer 4

The maximum output combination of 2 goods an economy can produce

Question 5

What does a point inside the boundary indicate? ^̮^

Answer 5

Unemployment or underutilization of economic resources.