Production Possibility Curve Flashcards
What does the PPC illustrate regarding scarcity?
The curve represents the limit of what can be produced with available resources. Points beyond the curve are unattainable.
What does moving from one point on the PPC to another represent?
A choice to produce more of one good and less of the other.
What does the slope of the PPC represent?
The opportunity cost of producing one good in terms of the other.
What does a steeper slope on the PPC indicate?
A higher opportunity cost.
What do trade-offs demonstrated by the PPC represent?
The inherent trade-offs in resource allocation.
What do points inside the PPC indicate?
That resources are not being fully employed or efficiently used.
What do points on the PPC represent?
Productive efficiency.
What can shift the PPC outwards?
Improvements in productivity or increases in resources.
What does a high level of unemployment result in regarding the PPC?
Production at a point inside the PPC.
What can lead to an outward shift of the PPC?
Improvements in health, education, or productivity of labour
These improvements allow the economy to produce more with the same resources.
What is the impact of asymmetric technology advances on the PPC?
Can lead to a shift outwards along one axis of the PPC
This indicates increased production capacity in that specific sector.
What typically causes an inward shift of the PPC?
War and famine
These events result in the destruction of resources and reduced productive capacity.
Fill in the blank: Improvements in health, education, or productivity of labour lead to an outward shift of the _______.
PPC
Fill in the blank: War and famine typically cause an _______ shift of the PPC.
inward
