Production possibilities curve

Question 1

Assumptions of PPC:

Answer 1

Human resources can be shifted.

Question 2

A production possibilities table:

Answer 2

Different combinations using resources fully and efficiently.

Question 3

Drawing a production possibilities curve:

Answer 3

PPC or frontier indicates combinations that are attainable when resources are fully and efficiently used. Shows the boundaries of production possibilities for producing two goods and represents potential output.

Question 4

Production possibilities curve and scarcity:

Answer 4

Scarcity exists because there are not enough resources to satisfy unlimited needs and wants. What it cannot produce, given its resources and the efficiency of these resources is a combination.

Question 5

PPC and efficiency and inefficiency:

Answer 5

Inefficiency occurs when resources are not fully and efficiently used, current output is lower than the potential output.

Question 6

PPC and choice:

Answer 6

Choice is illustrated by the available combinations along the PPC, society must choose.

Question 7

Allocative efficiency:

Answer 7

Achieved when economy is doing the best possible job satisfying unlimited wants and needs with limited resources. Market must first achieve technical efficiency. Occurs when an economy provides the greatest amount of consumer satisfaction.

Question 8

PPC and opportunity cost:

Answer 8

Is the value of the best alternative use that is given up or sacrificed.

Question 9

PPC and a change in resources:

Answer 9

Shift of PPC.

Swivel of PPC.

Question 10

Shift of PPC:

Answer 10

Result of an increase in the resources/ increase in technology that increases the productivity of the resources.

Question 11

Swivel of PPC:

Answer 11

Change in technology causes an improvement in the production of one of the goods.