PPFs Flashcards
1
Q
Why is the PPF shape concave to the origin
A
Because of imperfect factor substitution - so a straight line PPF is an indication of perfect factor substitutability of resources
2
Q
What does a movement along the PPF show
A
The opportunity cost of increasing output for one good at the expense of another
3
Q
What does the PPF tell us about specialisation
A
That in becoming more specialised there is more opportunity cost. There are diminishing returns to production
4
Q
What do points inside or outside of the PPF show
A
Under utilisation of resources or discovery of more resources or FOP
5
Q
What factors shift the PPF
A
Advances in tech
Changed in resources
More education and training
Changes in the labour force
