PPF’s

Question 1

PPF

Answer 1

Production Possibility Frontier:
shows a combination of two or more goods or services an economy can produce using all available resources efficiently

Question 2

Point inside a PPF

Answer 2

inefficient use of resources

Question 3

Point on a PPF

Answer 3

efficient use of resources

Question 4

point outside a PPF

Answer 4

unattainable

Question 5

movement along a PPF

Answer 5

shows opportunity cost

Question 6

opportunity cost on a linear PPF

Answer 6

stays constant

Question 7

causes of outwards shifts in the PPF

Answer 7

-higher productivity/efficiency of factor inputs
-increase in the stock of capital and labour supply
-innovation and invention of new products + resources
-discovery/extraction of new natural resources

Question 8

causes of a PPF shifting inwards

Answer 8

-damaging effects of natural disasters
-destruction/loss of factor inputs caused by civil war or conflict
-large scale net outward labour migration (brain drain)
-a trend decline in the productivity of inputs

Question 9

asymmetric growth

Answer 9

an economy can grow because of an increase in productivity in one sector of the economy