PPC and Movement/Shifts of a PPC (Chapter 5)

Question 1

PPC Definition

Answer 1

The Product possibility curve is a graph model to physically show the maximum output of two goods based with the resources available. It shows the best possible way to allocate your resources

Question 2

What is an economy

Answer 2

An economy is any are where production, exchange and consumption takes place, and is measured through the amount of goods and services it produces per week

Question 3

The efficient reallocation of resources in an economy

Answer 3

The most efficient reallocation of resources is found on the PPC. This is the total amount of consumer goods and capital goods or a combination of both a national economy can produce using its scarce resources.

Question 4

The Inefficient allocation of resources

Answer 4

When the economy is much below the PPC curve, they aren’t using enough resources and is inefficient causing a waste of resources.

Question 5

Outwards shifts in a PPC

Answer 5

• More natural resources
• Increased labor and capital
• Investments in infrastructure, road, telecommunication networks and healthcare
• New technology

Question 6

Inwards shifts in a PPC

Answer 6

• Non-renewable resources are depleted
• Labor falls and enterprise stops
• Bad capital
• Less education
• Decaying infrastructure