PPFs Flashcards
1
Q
What does a PPF curve show?
A
The maximum production of 2 goods/services given the factors of production
2
Q
What does a straight PPF show?
A
Constant opportunity cost
3
Q
What does any point on the curve show?
A
That it is productively efficient
4
Q
Where is a productively inefficient point?
A
Inside the curve
5
Q
What is the point outside the curve?
A
The point shows that it’s unattainable given the factors of production
6
Q
Why don’t we know if a PPF is allocatively efficient?
A
Because we don’t know the consumer demands
7
Q
When does a PPF curve shift out?
A
When there are more/better resources available
8
Q
When does a PPF curve shift inwards?
A
When there is a shrinking economy
