lesson 3 - introduction to production possibility frontier Flashcards
1
Q
Define the term opportunity cost?
A
The benefit lost from the next best alternative forgone ie the cost of your choice
2
Q
What are the four things that a production possibility frontier shows?
A
The maximum production potential of an economy
Opportunity cost
Possible unobtainable production
Efficient or non-efficient allocation of resources
3
Q
An example of cars and bikes is used in a production possibility frontier, if more cars are produced what will happen to the number of bikes produced?
A
It will decrease
4
Q
A production possibility frontier shows the different combinations of goods that can be produced if all resources are what?
A
Fully and efficiently organised
