PPFs Flashcards
What do PPFs show?
How resources are being used. A simplification of an economy which only produces 2 products
—> the curve itself represents the max amount of goods and services that an economy is capable of producing, given its current set of resources.
- different points along the curve show different choices
How are opportunity costs shown in PPFs?
If an economy/firm/organisation is operating on its PPF, in order to increase output of one good/service, we must reduce output of the other
How does the PPF shift?
If you increase the quantity and/or quality of the current set of resources, you can shift the PPF outwards to the right (e.g. take land, join the EU, hire more services, etc)
- if decrease in quantity and quality the curve will shift inwards, left (e.g. from natural disaster, wars, etc)
