CH4 Production Possibility Frontiers

Question 1

What does the production possibility frontier show?

Answer 1

it shows the different combinations of economic goods which an economy is able to produce if all resources in the economy are fully and efficiently employed. In other words, it shows the maximum potential output of an economy

Question 2

Can an economy produce at any point outside its existing PPF?

Answer 2

no. This is because the PPF shows the maximum potential output of an economy

Question 3

When might the PPF be able to move to the right?

Answer 3

if there is economic growth

Question 4

growth in the economy can happen if?

Answer 4

-if the quantity of resources available for production increases
-if there is an increase in the quality of resources; education will make workers more productive whilst technical progress will allow machines and production processes to produce more with the same amount of resources

Question 5

What are some factors that can result in the PPF shifting inwards (left)

Answer 5

anything that can result in the productive potential of an economy falling can lead to an inward shift of the PPF. E.g:
-war can destroy economic infrastructure
-a rapid fall in the number of workers in a population

Question 6

What is there a potential conflict between?

Answer 6

between consuming now and economic growth fuelled by investment

Question 7

What is meant by productive efficiency?

Answer 7

means that production takes place at lowest cost