PPFs Flashcards
ppf illustrate
scarcity and choice
in micro what 2 things does ppf show
Max possible prod of 2 goods or services with a given level of FOP
Various combo of 2 goods and service that can be produced with a given level of FOP
in macor waht 2 things does ppf show
Max possible prod of all g/s that can be produced with the level of FOP in teh econ
Tells us various combo of all g/s that can be produced with given FOP in econ
what 3 things can ppf show us
opp cost
efficiency
how production of g/s can be increased
in micro on a ppf we look at
two speciifc good
what are x and y axis on ppf for micro
names of specific g/s we looking at
we cannot produce beyond the
linw
Firms wants to specialise and produce more tablets i.e 50-60 how would they do this
reallocate FOP to increase tablets/suit tablet prod
draw PPF 1curve with 3 points along curve
axis labelled
3 points dotted with numbers
on my ppf curve point a to b on ppf a firm ..
give up producing some laptops
They go from 75 tp 60 laptops when moving from 50-60 tablets whats the opp cost
The opp costs is 15 laptops when producing 10 more tablets units
i increase units of tablets by 10 this time hteres an opp cost of 30 units of laptops as opposed to og 15
what does this mean CONCAVE PPF can show us
law of increasing opp cost
Whats the law of increasing opp cost
-the more we produce of something more of other things that has to be given up each tim
what are the labels we can have in macro ppf
consumer goods+capital goods
goods and service
using goods and service on y and axis measn
nothing else can be produced in econ
we use consumer goods and services to show were looking at an
entire econ
why when produce more tablets they give up sig more laptop
4 marks
intially FOP more suited laptop prod
however as move towards tablet
FOP more speicalised towards tablets,
so now less suited towards laptops
in general as we move along PPF curve what happens to FOP
more suited towards one thing than other thing
opp cost example curve is same for macro and micro T/F
T
Draw linear diagram ppf for macro
consumer goods
capital goods
linear line with drawn line and numbers
linear diagram demonstrates
constant opp cost
what 3 types of eficiency can we derive from PPF
PRODUCTIVE ALLOCATIVE PARETO
DRAW DIAGRAM WITH 5 POINTS
laptops
tablets
5 points abc
d within
e outside
on a ppf concave diagram what points are producitvley efficient
ABC
Why are ABC productivley effeicient on PPF
3 MARKS
using up all FOP to max level
so getting max prod from all FOP available
there is no waste/unemployment
whre would not be productivley effeicient
d / any point not on curve
- how about above i.e e
why is any point not on ppf curve productivley ineefficent
we are wasting FOP as not getting max use of them
use and output
explain what the point e / point beyond curve SHOWS
3 PARTS
unattainable with given FOP
so firm on micro sense can not produce beyond curve yet
with given FOP
any pointbeyonf curve is unattainable with given FOP so on a micro sense what does this mean
so firm can not produce beyond curve yet with given FOP
in macor waht is point D / points within curve
unemployment
why ispoint D unemploymeny on ppf in macro
2 MARKS
not maxing use of FOP in econ
so hay unemployment of labour/capital
ALLOCATIVE efficiecny means
Whether what’s being produced satisfying consumer demand and wants
can we tell Allocative efficiency from PPF
NO
Why cant we tell allocative efficiency from PPF
we dunno about consumer demand i.e if all consumers wanted was laptops point b may not eb allocativley efficient as allcoatgivley efficient would be near laptops
Plot point where allocative efficicenyc would be if all society wanted was laptops
it would be at the top near laptops
PARETO efficieny is
No one can be made better off without making someone worse off
whre would pareto efficiency be on graph
- EVEN IN AND OUT?
Any point on ppf is pareto efficienct
i move from point B to Point C explain why im being pareto efficient
4 marks
we producing more tablets but giving up laptops so
we making people who like tablets better off
but people who liek laptops worse off
as less are produced
what are the 3 ways we can use PPF to show INCREASING PRODUCTION
move from point within curve to point on
reallocate resources towards certain product
shift PPF curve outward
why is Business @ point D prod inefficient and pareto efficient ,
not maxing use of FOP so thers some unemployment + someine being made worse off by choice of produciton
give example of ho we can shift from point D to that on a curve
use FOP better e.g employ idle capital and labour to increase prod
what efficiency is a bs operating on if on line
pareto - AS THOSE WHO LIKE X ARE WORSE OFF
prod as all fop being employed
how can i show increasing production if im already on curve
3 MARKERS
reemploy and reallocate FOP to spec more in tab production than laptops
by moving along PPF from point A(PRODUCING LAPTOPS TO AN EXTENT to B (PRODUCING MORE TABLETS)
move fop along to to favour tab production by reallocating fop
E.g move worekrs away from producing laptops to taltes
How can we , to show increasing produciton shift ppf outward
increaing quality
or quantity of cell
what is beauty of shifting curve outward
you dont need to give up laptops as at point y more laptops produced as well as tablets
draw a shifting curve outwards
new line
x and y axis
label with equal numers nad increases
acronmy for shifting curve outward
Q2CELL for FOP
Give example f Q2 cell 3 marks
hitn think 3 fop
Increase quality of labour thorugh productivity by training up better which will allowing workers to produce more in given time period
Increase quality of capital by igrading machinery
Increase quality/quantity of land e,g agriculture through fertiliser so more crops can be produced
how else can our curve shift
through favouring prod of specific good
explain how curve can shift to show increase prod through favouring prod of specific good
a change in q2cell that purely suit/specialised production of tablets ,cause shift which is not parallel
give 3 example of change in Q2 CELL that favours speciifc good
increase in quantity of labour but can only produce tablets
IMPROVE Quality (through training), prod of labour , in prod of tablets
quantity of capital only machinery produces tablets .
draw shift of PPF that favours one specific product
axis secific goods
arrow showin shift
shift is like extra line starting 3/4 of way
