production possibility curves Flashcards
What is a production possibility curve?
A curve showing all the possible combinations of two goods that an economy can produce within a specified time period with all its resources fully and efficiently employed.
What does a point inside the production possibility curve indicate?
That resources are not fully employed or used efficiently.
What can a nation do to move onto the production possibility curve?
Use its resources to the full.
What do points on the production possibility curve represent?
Combinations of maximum production of two goods.
Fill in the blank: A production possibility curve shows the trade-off between _______ and clothing.
food
True or False: Producing at point V indicates efficient use of resources.
False
What effect does moving to points x or y on the production possibility curve have?
It allows for increased production of both clothing and food.
