Production Possibility Frontiers

Question 1

Define and describe the term PPF

Answer 1

Production possibility frontier
Shows all possible combinations of two goods that we can produce,using all resources efficiently

Question 2

What is terms used to describe a point on,inside and outside the PPF

Answer 2

On: Productively efficient
Inside: Productively inefficient
Outside: Impossible

Question 3

What are possible reasons why a point is inside the PPF

Answer 3

Unemployment
Underemployment

Question 4

A straight line PPF has a … opportunity cost
Fill in the blank

Answer 4

Constant

Question 5

A curved PPF has an … opportunity cost
Fill in the blank

Answer 5

Increasing

Question 6

What can cause an outward shift of a PPF

Answer 6

Inward migration
Improved technology

Question 7

What can cause an inward shift of a PPF

Answer 7

Outward migration
Natural disaster

Question 8

If the production of one good increases more than one good on a PPF
What will happen to PPF,refer to the X and Y axes

Answer 8

If it is the good on the Y axis,the PPF will move upwards on the y axis but will start at the same point on the X axis

If it is the good on the X axis,the PPF will move outwards on the X axis but will start on the same point on the Y axis

Question 9

What is a Consumer Good and give an example

Answer 9

Consumer good-goods that we consume
food,jewelry

Question 10

What is a Capital good and give an example

Answer 10

Capital good-goods that we use to produce consumer goods
-machinery
-oven

Question 11

What will happen to the PPF in the future if the production of capital goods increases and why

Answer 11

The PPF will shift outwards because the potential production of consumer goods will also increase as a result of more capital goods