1.4 Production Possibility Curves

Question 1

What is a production possibility curve?

Answer 1

An economic model that considers the maximum possible production to produce only two goods/services

Question 2

What is on the y-axis of a PPC?

Answer 2

Capital Goods

Question 3

What is on the x-axis of a PPC?

Answer 3

Consumer Goods

Question 4

What does a point inside the PPC represent?

Answer 4

Inefficient allocation of resources

Question 5

What does a point on the PPC represent?

Answer 5

Productive efficiency

Question 6

What does a point outside the PPC Represent?

Answer 6

Unattainable

Question 7

What does an inward shift represent on the PPC?

Answer 7

Economic Decline

Question 8

What does an outward shift represent on the PPC?

Answer 8

Economic Growth

Question 9

When does economic growth occur?

Answer 9

When there is an increase in productive potential of an economy

Question 10

When does a shift outwards happen on a PPC?

Answer 10

Increase in quality/quantity of FOP

Question 11

When does a shift inwards happen on a PPC?

Answer 11

Decrease in quality/quantity of FOP