Production possibility diagram ppf/ppc

Question 1

ppc

Answer 1

shows the maximum combinations of two goods that can be produced by an economy assuming all resources are fully employed and used efficiently

Question 2

Point on the ppc graph

Answer 2

Any point on the ppc implies that all factors of productions are fully employed and used efficiently

Question 3

points under the graph

Answer 3

An economy operating under is operating inefficiently with unused resources (idle machines and unemployed labour) attainable

Question 4

points over graph

Answer 4

unattainable

Question 5

shifts in ppc

Answer 5

caused by changes in quantity and efficiency of factors of production, this leads to a shift in ppc

Question 6

outward shifts in ppc

Answer 6

tech improvements leads to an increase productivity of capital equipment
discovery of new resources
improvement in educations and training that leads to a more productive workforce
increase working pop/more immigration

Question 7

inward shift

Answer 7

Wars/disasters/global warming that devastate productive resources
prolonged recession which can lead to permanent loss of productive capacity if businesses close down.

Question 8

using a ppc to show an opportunity cost

Answer 8

The diagram shows the concept of opportunity cost as more capital goods are produced more consumer goods are given up. The opportunity cost is the gradient of ppc

Question 9

ppc shows the economic growth

Answer 9

any factors that lead to an outward shift in ppc means there’s an increase in productive capacity and increase in output of both capital and consumer goods.

Question 10

Economic growth

Answer 10

an increase in the productive capacity of an economy over time.

Question 11

economic efficiency:
productive efficiency

allocative efficiency

Answer 11

when max output is produced from available factors of production (not possible to produce more of one good without producing less of the other)

when an economy factors of production are used to produced the combination of goods and services that’s maximises society’s welfare