Production Possibility Frontiers Flashcards
use basic knowledge understanding
what is the use of a PPF
we can use them to show the maximum potential output combination of two goods that a firm can achieve
what axis is quantity and price in for a PPF
price on the y axis
quantity on the y axis
how is a PPF drawn
as concave to the origin
what does a movement along a country’s ppf imply
it implies that production of one good is being increased at the expense of production of another
what do points inside a PPF represent
inefficient allocation of resources
why will a PPF shift outwards
a PPF will shift outwards if the firm or economy gains more factors of productions, or the quality of the factors improve
If we draw a macro economic PPF and it shifts outwards what does that mean
it means there is economic growth
what is a straight line in a ppf an indication for
perfect sustainability of resources such as labour or capital
