PPF’s Flashcards

1
Q

PPF

A

Production Possibility Frontier:
shows a combination of two or more goods or services an economy can produce using all available resources efficiently

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2
Q

Point inside a PPF

A

inefficient use of resources

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3
Q

Point on a PPF

A

efficient use of resources

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4
Q

point outside a PPF

A

unattainable

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5
Q

movement along a PPF

A

shows opportunity cost

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6
Q

opportunity cost on a linear PPF

A

stays constant

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7
Q

causes of outwards shifts in the PPF

A

-higher productivity/efficiency of factor inputs
-increase in the stock of capital and labour supply
-innovation and invention of new products + resources
-discovery/extraction of new natural resources

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8
Q

causes of a PPF shifting inwards

A

-damaging effects of natural disasters
-destruction/loss of factor inputs caused by civil war or conflict
-large scale net outward labour migration (brain drain)
-a trend decline in the productivity of inputs

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9
Q

asymmetric growth

A

an economy can grow because of an increase in productivity in one sector of the economy

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