PPF (Production possibility frontiers)

    Cards (12)

    • PPF stands for?
      Production Possibility Frontiers
    • Production Possibility Frontiers
      1. shows the different combinations of economic goods an economy can produce when all resources are fully and efficiently deployed
    • Production Possibility Frontiers

      are on the line of the graph
    • A point inside the line on the graph shows
      not all resources are being fully and efficiently deployed
    • A point outside the graph is
      impossible and not achievable
    • Capital goods
      1. goods (machinery/ equipment) used in production of consumer goods
      2. eg a tractor
    • Consumer goods
      1. goods bought by the end user
      2. eg parsnips
    • Capital goods + consumer goods
      = ALL OUTPUT
    • Movements across a PPF curve reveal
      an opportunity cost
    • outward shifts

      1)show economic growth
      2) indicates an increase in productive potential
    • inward shift
      1. shows a decrease in productive potential
      2. therefore shows negative economic growth
    • A point inside the PPF diagram shows

      not all resources are being fully and efficiently deployed