Production Possibility Frontiers Flashcards
What does the PPF curve show
The maximum possible production of 2 goods and services with given factors of production
The various combinations of 2 goods and services that can be produced with given factors of production
What does the concave PPF represent
The law of increasing opportunity cost
What does a linear PPF show
Constant opportunity cost
What efficiencies can be discussed on a PPF
Productive
Allocative
Pareto
Where will the productively efficient point be
Any point on the curve
What will any point inside the curve be regarded as
Productively inefficient
How would you describe a point outside of the PPF curve
Unattainable with the current factors of production
Which efficiency cannot be worked out with a PPF
Allocative
What is Pareto efficiency
No one can be made better off without making someone worse off
How could a firm move from a point inside their PPF to a point on the PPF
Utilise all of their factors of production
How can a firm shift their PPF curve outwards
Increase the quantity or quality of their factors of production
Why may a PPF shift only in one good or service
Improvement in the quantity or quality of factors of production specialised in one area
