PPC

Question 1

PPC Curve

Answer 1

Maximum possible production of 2 goods/services with given factors of production

Question 2

Ppc shows

Answer 2

Various combinations of 2 goods/services that can be produced with given factors of production

Question 3

What does concave curve shows

Answer 3

Law of increasing opportunity cost

Question 4

Law of increasing opportunity cost

Answer 4

The more we produce something, the more we have to give up the other thing each time.

Question 5

What differentiates macro from micro ppc

Answer 5

Macro labeling is [goods service]
Micro labeling is [any specific product/service]

Macro is an overview of the whole economy.

Question 6

What does linear ppc indicates

Answer 6

Linear ppc indicates constant opportunity cost meaning that the decrease number of production for goods is the same amount of increase number of services. (for both macro micro)

Question 7

What is allocative efficiency

Answer 7

Point on the ppc curve however, to be allocatively efficient, the point must lean towards the product consumer wants most.

Question 8

Pareto efficiency

Answer 8

Nobody can be made better off without making somebody else worse off (producing more cars at A will make toilet production worse thus, making people who like toilet worse off)

Question 9

How to achieve productive efficiency

Answer 9

Use factors of production better e.g. any unemployed workers we can employ to increase labour or use any idle capital to better use factors of production

Question 10

Ppc curve, how to produce more toilet instead of cars

Answer 10

Reallocate factors of production, make machinery produce toilet instead of cars

Question 11

How to shift ppc outwards

Answer 11

Increase quantity and or quality of factors of productions. E.g. increase number of capital, labour or increase quality by training people, upgrading machine. This allows worker to produce more at a lower time span.