PPF

Question 1

what is ppf?

Answer 1

Production Possibility Frontier

Question 2

what does it do?

Answer 2

a graph which shows a range of production alternatives available to a hypothetical economy

Question 3

what does it compare?

Answer 3

two g/s
IF they are working to maximum capacity

Question 4

productive capacity

Answer 4

physical limit to a nation’s production of g&s

Question 5

Efficient point of the graph

Answer 5

• on the curve

Question 6

Inefficient point on the graph

Answer 6

inside the circle

Question 7

Unattainable point of the graph

Answer 7

outside the curve

Question 8

Assumptions of the ppf

Answer 8

1. only two g/s are produced in the economy
   2.all resources can be used to produce these goods
2. all resources are implemented efficiently and fully

Question 9

increasing nations productive capacity

Answer 9

• immigration
• exploration for natural resources
• new tech
• increased efficiency/skills of labour
• foreign investment

Question 10

Shifting the graph inwards

Answer 10

-droughts
-deaths of people
-emigration

Question 11

consuming outside the ppf

Answer 11

• leads to inflation
• consuming more than production
• trading–> inporting