Production Possibility Frontiers

Question 1

Define PPF

Answer 1

It is the indicator of the maximum possible output that can be achieved given a fixed set of resources and technology in a particular time period.

Question 2

List factos which increase PPF

Answer 2

New technology
Higher population/immigration
Increased productivity
New resources

Question 3

List factors which decrease PPF

Answer 3

Emmigration
Natural disasters
Recession

Question 4

Define productivity

Answer 4

A measure of efficiency, measuring the ratio of inputs to outputs

Question 5

Define consumer goods

Answer 5

Goods bought and used by consumers, rather than by manufacturers for producing goods

Question 6

Define capital goods

Answer 6

Goods that are used in producing other goods, rather than being consumed

Question 7

Define productive efficiency

Answer 7

This is achieved when in an economy when it’s not possible to make anyone better off without making someone else worse off.

Question 8

Define allocative efficiency

Answer 8

Occurs when the available economic resources are used to produce the combinations of goods and services that best match peoples tastes and preferences