Theme 1.1.4 production possibility frontiers (unit 4)

Question 1

Explain what a production possibility frontier is.

Answer 1

It shows the maximum potential output of one good given a level of output of all other goods in an economy.

Question 2

What it looks like.

Answer 2

tbc

Question 3

What is a consumer good?

Answer 3

A consumer good are goods and services that are used to satisfy peoples needs and wants.

Question 4

consumption vs investment.

Answer 4

Some countries will sacrifice short term lower levels of consumption so that they can produce more capital goods which will result in a higher economic output in the future and higher levels of consumption. Short term hardship fr long term payoff.

Question 5

What is a margin?

Answer 5

It is a point of possible change.

Question 6

What are capital goods?

Answer 6

They are goods that are used in the production of goods such as factories or offices.

Question 7

What is productive efficiency?

Answer 7

It is where you are on the edge of the ppf meaning you are using the fewest FoP as possible.

Question 8

What is allocatively efficient?

Answer 8

It is where the social welfare gain is maximised.