Module 1.2: Production Possibilites Curve Flashcards
1
Q
A measure of efficiency that shows the number of outputs per unit of input
A
Productivity
2
Q
All other things constant
A
Ceteris Paribus
3
Q
Resources are easily adaptable for producing either good. Result= straight line.
A
Constant Opportunity Cost
4
Q
As you produce more of any goods, the opportunity cost will increase. Resources are not adaptable to both. Result is a curved line.
A
Law of Increasing Opportunity Cost
5
Q
Products are being produced in the least costly way. Any point on the PPC.
A
Productive Efficency
6
Q
Products produced are most desired by society. Optimal point on PPC depends on most desired.
A
Allocative Efficency
7
Q
PPC Shifts
A
- Change in quantity or quality of resources
- Change in technology
- Change in trade (only in consumption)
