PPF curve and factors of production Flashcards
What does the ppf represent
The maximum potential output that can currently be produced in a period of time
What is the total output in an economy known as
GDP
What is on the y axis of a ppf curve
Consumer goods
What is on the x axis of a ppf curve
Capital goods
What does it mean if an economy is operating at a point inside the ppf curve
Inefficient use of factors of production e.g unemployment
What does it mean if an economy is operating at a point on the ppf curve
Productively efficient
What is a point outside the ppf curve
Highly desirable but currently unachievable
How can an economy achieve a point outside the ppf curve
higher quality or quantity of factors of production
Causes a shift outwards of ppf (economic growth)
What are the 4 factors of production
Land, labour, enterprise and capital
What is land
Natural resources used in production
some are renewable e.g. forests and water
some are non renewable e.g. coal and copper
What is labour
Human resources used in production
How is the quality and quantity of labour determined
quantity depends on the size of working population
quality depends on education and training
What is enterprise
Innovation to produce goods and services e.g. clothing business
What is capital
Man made resources used in production e.g. machinery
How is the quantity and quality of capital determined
Quantity depends on the level of capital investment in an economy
Quality depends on level of technology and amount of wear
