chapter 4 - production possibility curve Flashcards
1
Q
definition of:
ppc
A
represents the maximum combination of goods and services which can be produced in an economy (the productivity capacity of an economy)
2
Q
inefficient ppc
A
resources are not allocated to their maximum potential
3
Q
efficient ppc
A
using resources in a way as to maximise the production of goods and services
4
Q
unattainable ppc
A
unattainable bcs it is outside the productive capacity of an economy
5
Q
movement along the curve
A
- all resources are used
- factors of production are allocated to their best of purpose
- movement along the curve results in opportunity cost
6
Q
why ppc shift outwards?
A
- new resources discovered
- investment in capital
- migration of skilled labour
- improved education, training, healthcare
7
Q
why ppc shift inwards?
A
- depletion of resources
- detrimental changes
- war
- failure to invest in factors of production
