PPF

Question 1

What does the PPF determine

Answer 1

The efficiency of capital goods mixed with consumer goods. Inside the PPF is inefficient and outside the PPF is unattainable. On the PPF line is when it is most efficient

Question 2

Causes of an outward shift in PPF

Answer 2

Trade between countries, Higher productivity of factor inputs, Better management of factor inputs, Increase stock of capital and labour supply, Invention of new products and resources, Discovery of new natural resources

Question 3

Causes of inward shift in PPF

Answer 3

Damaging effects of natural disasters, Destruction caused by conflict, Large scale net outwards labour migration
Trend decline in the productivity of inputs caused by persistent recession

Question 4

Resource Depreciation

Answer 4

Machinery, Skills Atrophy, Buildings, Basic Infrastructure

Question 5

Resource Depletion

Answer 5

Human Capital Flight, Capital Scrapping, Natural Disasters, Deforestation

Question 6

Law of demand

Answer 6

Demanding more of something when price is reduced.
Demanding less of something when price is increased.
Purchasing highest quality products at lowest price possible

Question 7

Hypothesis of Diminishing marginal utility

Answer 7

For a single consumer the marginal utility derived from a good or service diminishes for each additional unit consumed

Question 8

Why do people act irrational?

Answer 8

Lack of info, Bias, Satisficing over maximising, Social Norms, Nudges, Altruism and Fairness, Choice Architecture and Framing