Production Possibility Frontier Flashcards
What is a Production Possibility Frontier/Curve?
A ppf is a graph showing the various combinations of two goods that an economy is able to produce with fixed resources
What are the assumptions that a ppf is drawn based of off?
The economy produce only two goods
The amount of resources is fixed
Each good can be produced using changing ratios of the fop
When is an economy said to be efficient?
An economy is said to be efficient when it is producing on its ppf
What can we say about the ppf?
The ppf is downward sloping meaning it is only possible to produce more one good by giving up some units of the other good
Compared to its origin, what can we say about the ppf?
The ppf is concave to its origin
What factors could cause the ppf to move outward?
Economic Growth
Improvements in labour productivity
Discovery of new natural resources
Growth in population
Technological progress
What is economic efficiency?
Economic efficiency is when an economy is producing on its ppf
