Production Possibility Curves (PPCs) Flashcards
What is a Production Possibility Curve?
A Production Possibilty Curve (PPC) is a curve that shows all of the maximum possibilites of the combination of two goods that can be produced by an economy assuming all the resources are fully and efficeintly utilised, given a fixed quantity of resources and level of technology.
What are the factors that might shift the PPC?
- quantity of land
- quantity of capital
- quantity of labour
- quantity of entrenprenuership
- quality of land
- quality of capital
- quality of labour
- quality of entrenpreneurship
- state of technology
What is quantity of land?
Quantity of land is the discovery of new minerals.
What is quantity of capital?
Quantity of capital is the infrastructural development or the implementation of policies to attract more foreign investments.
What is quantity of labour?
Quantity of labour is implementation of policies to attract more foreign workers or the increase of married women re-entering the workforce.
What is quantity of entrepreneurship?
Quantity of entrepreneurship is the implementation of policies to provide more incentives/business advice/knowledge transfer to new start-ups.
What is quality of land?
E.g.: Increase of quality of land through the use of fertiliser.
What is quality of capital?
E.g.: Increase in quality of capital through research and development.
What is quality of labour?
E.g.: Increase of quality of labour through skill upgrading programmes.
What is quality of entrepreneurship?
E.g.: Increase of quality of entrepreneurship by equipping students with necessary skills and exposure to doing business.
What is improvement in technology?
Improvement of technology through more research and development.
