LS3 - Production Possibility Frontier

Question 1

Opportunity cost

Answer 1

Value of the next best alternative forgone

Question 2

PPF

Answer 2

Production Possibility Frontier shows the maximum potential output of a combination of two goods assuming all resources are being used

Question 3

Economic Growth

Answer 3

It is the increase in the total level of output of goods and services in an economy

Question 4

Difference between consumer goods and capital goods

Answer 4

Consumer goods are used to satisfy people’s wants and needs.
Capital goods are used to produce other goods

Question 5

Why may the economy not be on a point on the PPF graph

Answer 5

• Insufficient use of resources
• Underutilised resources