chapter 4 -PPC

Question 1

definition of the production possibility curve

Answer 1

it represents the maximum combination of goods and services which can be produced in an economy

Question 2

definition of the PPC diagram

Answer 2

its a graphical representation of the maximum combination of goods and services that can be produced in an economy per period of time.

Question 3

what are the 2 conditions for a PPC to prove true

Answer 3

1. full use of FOPs
2. efficient use of all resources

Question 4

what causes an outward shift of the PPC

Answer 4

an economic growth
meaning economy can produce more goods and services, without necessarily incurring an opportunity cost

Question 5

results of advanced tech

Answer 5

higher productivity and output for an economy
even with same amount of FOPs, more can be produced

Question 6

what causes an inward shift

Answer 6

detrimental changes such as powerful storm, a natural disaster or a war that destroys a large proportion of the economy’s farmland, factories and infrastructure
decrease in productive capacity.

Question 7

definition of efficiency

Answer 7

This occurs when an economy operates on its PPC, using its scarce resources in the best
possible way.

Question 8

definition of inefficiency

Answer 8

This occurs when an economy operates within its PPC because there are unemployed resources or resources are not being put to their best use.