Production possibility Frontiers (PPF's) Flashcards
1
Q
What are PPF’s?
A
Graphical representations of several important economic concepts:
- opportunity costs
- economic growth
- economic efficiency
2
Q
What do PPF’s and PPC’s both show?
A
The maximum productive potential of an economy, using a combination of two goods or services, when resources are fully and efficiently employed.
3
Q
What do points lying on the PPF show?
A
Efficient output combinations
4
Q
What do points below/underneath the PPF show?
A
Inefficient combinations - not all resources fully utilised
5
Q
What do points above/beyond the PPF show?
A
An output combination that is not yet attainable
