1.1.4 Production Possibility Frontiers

• Capital Goods


  Goods used in the production process eg. machinery or factories
• Consumer Goods


  Goods produced for consumption
• Concave Production Possibility Frontier


  There is a rising marginal opportunity cost as more of one good is produced because of imperfect factor mobility
• Pareto Efficiency


  An economy where resources cannot be reallocated without making another individual worse off
• Barter


  The exchange of one good or service for another without using money
• PPF

  The maximum possible combination of capital and consumers goods and economy produce with its available resources
• Changes in Production on a PPF


  -Increased capital goods, but no increase in consumer goods shows inefficiency

  -Increased consumer goods, but no increase in capital goods shows increased productivity likely due to improved tech