PPF

Question 1

What is the production possibilities frontier?

Answer 1

The economy operating at full efficiency utilizing all resources and the most current technology.

Question 2

What assumptions do we make when we construct the production possibilities frontier?

Answer 2

• If the economy is operating in side the PPF it can be inferred that the economy is not operating at full efficiency.
• On the line the economy is running at full efficiency producing the most that we are capable of producing.
• Outside of the line production is not possible.

Question 3

Define Technical efficiency?

Answer 3

Using all resources fully with the most current technology

Question 4

What is meant by sustainable growth?

Answer 4

Sustainable means to use resources no faster than they are capable of replenishing themselves