Production Possibility Frontier Flashcards
1
Q
What does a PPF curve show?
A
- How much an economy can produce given existing resources.
- The different choices that an economy faces.
2
Q
What does a PPF curve look like?
A
Ignore Pareto*
3
Q
What factors can cause the whole PPF cruve to move?
A
- Increase in Factors of Production (C.E.L.L)
- Increase Productivity
- Improvement in Technology
4
Q
A
5
Q
Define PPF
A
Is the combination of 2 products, that shows the maximum output combinations using all available factors of production efficiently.
6
Q
Is it possible to have a value beyond the PPF curve?
A
No, that value is unattainable
7
Q
What do we call a value within a PPF curve?
A
Inefficient combinations
8
Q
Why do we get values that are within the PPF curve?
A
- Unemployed resources
- Used inefficiently
9
Q
A
10
Q
How does trade with other countries affect the PPF curve?
A
- Allows other countries to consumer beyond their own PPF curve (improvements in economic welfare)
11
Q
What does producing more goods with the same amount of resources show?
A
- Improvement in welfare
- Gain in allocative efficientcy
