Production Possibility Frontier (PPF) Flashcards
Define what a PPF is and how to desribe it
What does a production possibility fronter show
The maximum output combinations of two goods or services whencall resources are fully and efficiently employed
If the PPF shifts outwards in a parallel direction this means there was an increase in…?
The quantity factors of production
If there is a point outside the current PPF curve this means it is currently…
Unnatainable given the current level of resources in the economy
If there is an point inside the frontier this illustrates a situation where the factors of productions are…
Not fully employed and/or being used efficiently
And increase in quantity can be a result of…
New energy supplies, increase in workforce, investment in new machinery and technology, increased land/labour resources
What can cause an increase in supply
Improved technology and bumper crop + price of producfion goes down
