Ppf Flashcards
1
Q
Definition
A
Maximum possible production of two goods/ services with given factors of production.
2
Q
Allows for both
A
Micro and Macro analysis, micro has two specific goods on the axis, while macro will have g+s or consumer + capital.
3
Q
Law of increasing opportunity cost
A
When the graph is curved, the continual, constant increase in x will lead to a continually larger fall in y each time.
4
Q
Moving along the curve
A
Is reallocating FoP to produce more x or y.
5
Q
Shifting the curve
A
Changing the quality/ quantity of the factors of production
6
Q
Where is productive efficiency on the graph?
A
Any point on the curve
7
Q
What does operating on the curve suggest on a macro level
A
Could indicate full employment, so any shifts inwards/ outwards could indicate changes in economic growth
