PPF - production possibility frontier

Question 1

benefits of the PPF?

Answer 1

shows how efficiently a country is using up resources and the opportunity cost of producing an amount of a certain good instead of the other

Question 2

what does PPF show?

Answer 2

the potential maximum output of a country’s economy

Question 3

what do the points on the curve show?

Answer 3

that the country is using their resources efficiently

Question 4

what do the points below the curve show?

Answer 4

that the country isn’t using their resources efficiently

Question 5

what do the points above the curve show?

Answer 5

these points are impossible as a country can’t produce more of both goods than the maximum output

Question 6

how can the PPF shift outwards?

Answer 6

by increasing investments in capital goods which increases productivity and profits

Question 7

how can the PPF shift inwards?

Answer 7

during a recession or when the GDP has negative growth

Question 8

what countries normally lay on the PPF curve?

Answer 8

HICs as they have better access to education, employment, services, healthcare and technology, can invest in capital goods

Question 9

what countries normally lay below the PPF curve?

Answer 9

LICs as they have limited access to education, healthcare, services and technology