12 Questions
What does a production possibility frontier (PPF) depict?
The maximum productive potential of an economy
What is the opportunity cost of producing more yoghurt at point B on the PPF?
The units of cheese that could have been produced
What is the reason why producing at C or D is inefficient?
Resources are not efficiently employed
What is the law of diminishing returns related to in the context of the PPF?
The increase in opportunity cost of producing more yoghurt
What is the opportunity cost of producing 100 units of cheese?
50 units of yoghurt
What can the PPF also depict besides opportunity costs?
Economic growth or decline
What is the characteristic of production on the PPF?
It uses resources efficiently
What is represented by an outward shift in the PPF?
Economic growth
What is the result of moving along the PPF?
A shift in production from consumer goods to capital goods
What is the assumption behind the original PPF curve?
A fixed amount of resources and a constant state of technology
What is the effect of supply side policies on the PPF?
An outward shift
What is the characteristic of a straight line PPF?
Constant marginal opportunity cost
Test your knowledge of production possibility frontiers, which show the maximum productive potential of an economy when resources are fully and efficiently employed. Learn how PPF curves can illustrate the opportunity cost of using scarce resources and the trade-offs between producing different goods or services.
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