production possibility curves

Question 1

what do production possibility curves show

Answer 1

1) they show the maximum possible production of 2 (all) goods and services using all factors of production
2) they show the combination of two goods and services that can be produced using all factors of production

Question 2

different types of PPF’s

Answer 2

straight line: constant opportunity cost
curve: changing opportunity cost

Question 3

different points on PPF

Answer 3

on the line: productively efficient, all factors of production are being used
within the line: productively inefficient, not all factors of production are being used
outside the line: unattainable

Question 4

different types of efficiencies and PPFs

Answer 4

productive efficiency: all factors of production are being used
allocative efficiency: whether what is being produced is satisfying consumer wants and needs- cannot tell from PPF
Pareto efficiency: nobody can be made better off without making someone else worse off, all points on the line

Question 5

increasing PPFs

Answer 5

-if within the line, you can use the factors of production better
-if on the line you can move production along the curve
-if on the line you can increase the productive potential of the two goods and services i.e. increasing the quality and quantity of the factors of production (Q^2CELL)