6.2.2 Production Possibility Frontiers (PPF)

• What does the Production Possibility Frontier (PPF) illustrate?

  Maximum output of two goods
• The opportunity cost of increasing production of one good is shown by the slope of the PPF


  True
• Opportunity cost refers to what is forgone when choosing one option over another option
• What are the two concepts illustrated by the PPF?

  Resource scarcity and opportunity cost
• Operating within the PPF curve indicates inefficient production


  True
• Match the component of the PPF with its definition:

  Efficient Production Points ↔️ Points on the PPF curve where resources are fully utilized

  Inefficient Production Points ↔️ Points within the PPF curve where resources are underutilized

  Opportunity Cost ↔️ What is forgone when choosing one option over another
• The PPF illustrates the trade-offs involved in producing different combinations of goods


  True
• The PPF shows the maximum output achievable with current resources and technology


  True
• What does operating within the PPF curve indicate?

  Inefficient use of resources
• The PPF model assumes that the quantity and quality of resources remain fixed
• The PPF model assumes that the amount of resources and technology is fixed during the analysis.


  True
• Why does the PPF model consider the production of only two goods or services?

  To simplify trade-off analysis
• Points within the PPF represent inefficient production because resources are underutilized or misallocated.


  True
• Match the production point with its description:

  Efficient Production Points ↔️ Economy produces maximum possible combination of goods

  Inefficient Production Points ↔️ Economy is not producing maximum output

  Points Outside the PPF ↔️ Unattainable with current resources and technology
• What does the Production Possibility Frontier (PPF) graphically represent?

  Maximum output with resources
• Efficiency in the PPF model means resources are fully and effectively utilized.


  True
• Order the steps to analyze the PPF based on production points:

  1️⃣ Identify efficient production points

  2️⃣ Identify inefficient production points

  3️⃣ Identify points outside the PPF
• Inefficient production points are located within the PPF
• Why does the PPF model consider only two goods or services?

  To simplify trade-offs
• What are the three types of production points analyzed within the Production Possibility Frontier (PPF)?

  Efficient, inefficient, outside
• Inefficient production points occur within the PPF curve.


  True
• The PPF illustrates trade-offs and opportunity costs involved in producing different combinations of goods.
• An outward shift of the PPF represents an increase in the economy's productive capacity.


  True
• Moving along the PPF illustrates the trade-offs and opportunity costs involved in shifting production between two goods.
• An outward shift of the PPF indicates potential for economic growth.


  True
• The PPF shows the maximum output achievable with current resources.
• Define the Production Possibility Frontier (PPF) in one sentence.

  Graphical representation of maximum output
• Operating within the PPF curve indicates inefficient production.


  True
• The PPF illustrates the opportunity cost of increasing the production of one good
• Arrange the following concepts related to the PPF in a logical order:

  1️⃣ Resource scarcity

  2️⃣ Opportunity cost

  3️⃣ Trade-offs

  4️⃣ Maximum output
• What does the slope of the PPF represent?

  Opportunity cost
• The PPF is a graphical representation of the maximum output of two goods or services
• What do points within the PPF curve indicate?

  Inefficient production
• The PPF model assumes that technology and resources can increase during the analysis.

  False
• The PPF model simplifies the analysis by considering only two goods or services
• Points within the PPF curve indicate that resources are being used efficiently.

  False
• Points outside the PPF represent combinations that are currently unattainable
• An outward shift of the PPF indicates economic growth.

  True
• What does a movement along the PPF illustrate?

  Trade-offs and opportunity costs
• The slope of the PPF represents the opportunity cost.