Production Possibilities Flashcards
Model
-Simplification of reality that helps you look at an issue
Scarcity
-Resources are limited
Frontier
-Outer limit of something, edge
Production
-Amount of products produced
Production Possibility Frontier
-The edge/limit of all production
What does the PPF show?
-ALL possible combinations of products for the economy to produce when all resources are used efficiently
Resources are ________
-Inputs
Products are ________
-Outputs
Labor
-Human work
Physical Captial
-Tools made to make labor more productive (resource and a product)
Natural Resources
-Energy and materials used that are provided by the universe
Raw Labor
-Skills built by training, education, and experience
Axes
-Numerical values for the x and y (horizontal: x, vertical: y)
PPF measures the _________ produced of a product _________
- Amount
- Per time period
Can this be graphed on a PPF?
Guns and Butter
-Yes, can be
Can this be graphed on a PPF?
Unemployment and Inflation
-No, can’t be
Can this be graphed on a PPF?
Health Care and Consumer Goods
-Yes, can be
Can this be graphed on a PPF?
Consumer Electronics and Factories
-Yes, can be
Can this be graphed on a PPF?
Passenger Vehicles and Tractor Trailers
-Yes, can be
Can this be graphed on a PPF?
Price and Quantity?
-No can’t be (Supply and Demand)
Opportunity Cost
-Next best option that we sacrifice
The slope of a PPF is ALWAYS ___________
-Negative
Curve
-Relationship by two variables being measured
Move Along a Curve
-The relationship between the variable does not change
