Production Possibility Frontier (PPF)

Question 1

What does a PPF diagram look like / try draw one for yourself?

Answer 1

Search Google

Question 2

What is the difference between a Macro and Micro PPF?

Answer 2

A Micro PPF focuses on two specific products like laptops and tablets whereas a Macro PPF focuses on the economy as a whole like goods and services.

Question 3

What is the Law of increasing opportunity cost?

Answer 3

The More we produce of something , the more we have to give up of the other

Question 4

What is the opportunity cost on a linear PPF

Answer 4

Constant - The amount given up of one good to produce another will always be the same - for example 20 laptops for 10 tablets.

Question 5

What does it mean if an economy is within the PPF curve

Answer 5

Anything within the PPF curve shows productive inefficiency and resources being wasted

Question 6

What does it mean if an economy is on the PPF curve

Answer 6

Anything on the PPF curve shows produtive efficiency and no resources being wasted

Question 7

What does it mean if an economy is outstretched on the PPF curve

Answer 7

Anything outside the PPF curve is unattainable within the current factors of production

Question 8

How does an economy go from inside the PPF curve on to being on the PPF curve?

Answer 8

Resources have to be used more efficiently so resources are not being wasted

Question 9

How does an economy move from one part of the PPF curve to a different part?

Answer 9

They would have to reallocate resources based on what they want to produce

Question 10

How to reach the outside of a PPF curve

Answer 10

Increase the total amount of factors of production in an economy