Micro/macro

• PPF

  Is the maximum potential two combination goods/services resources fully efficient and employed.
• PPF curve showing opportunity cost


  • Point A and B most efficient on PPF as producing Point B more yoghurt that cheese is produced, as shows opportunity cost cost more cheese.
  • Law of opportunity cost: cost of producing more than yoghurt increase, terms loss units of cheese could have been produced.
  • Point C and D are inefficient resources not used fully maximum potential which shift production closer to the curve.

  
• Economic growth and decline

  • PPF can show economic growth and decline.
  • Production under PPF is attainable and production outside PPF is not obtainable.
  • PPF resources efficiently (A and B), inefficient produce below PPF (C)
  • Economic growth can show outward sift of PPF from point A to curve point B.
  • decline in economy would cause an inward shift
  • Original curve: fixed amount resources being used, constant state of technology.

  
• Quantity or quality


  PPF shift curve outwards, productive potential of economy increases, as there is economic growth achieved through (supply - side polices)
• PPF curve shifting 


  • shifting the PPF curve outwards e.g. uses more resources which reduces opportunity cost of either capital or consumer good since more goods produced overall
• Captial goods


  Goods can be used to produce other goods e.g. Machinery
• Consumer goods


  goods that cannot produce other goods e.g. clothing
• Productive effiency


  • productively efficient are resources being used to their productive potential so their are efficient.
• Allocative Efficiency


  • Allocative Efficiency is no one can be made better of then make someone worse off.
  • If both goods produced, this would gain Allocative Efficiency.