The slope of a PPF curve represents the opportunity cost of producing one good over the other.
True
What does the assumption of fixed resources mean in the context of a PPF?
Total resources remain constant
Full employment on a PPF means that all resources are being used efficiently.
True
A PPF curve is typically concave to the origin, reflecting increasing opportunity costs
The PPF curve illustrates the trade-offs between producing more of one good versus the other.
What does the slope of the PPF curve represent?
Opportunity cost
An inefficient point on the PPF lies inside the curve.
Match the type of point on the PPF with its description:
Efficient Point ↔️ Maximum possible production
Inefficient Point ↔️ Underutilization of resources
Unattainable Point ↔️ Exceeds current capabilities
The PPF illustrates the trade-offs between producing different goods given limited resources.
What is one assumption of the PPF regarding resources?
Fixed resources
How does moving along the PPF illustrate trade-offs?
Increased production of one good decreases the other
What does a Production Possibility Frontier (PPF) graph represent?
Maximum possible combinations
The PPF curve is typically concave to the origin due to increasing opportunity costs.
True
Efficient points on a PPF lie on the curve.
Where are unattainable points located on a PPF graph?
Outside the curve
A decrease in resources causes the PPF curve to contract inward.
True
The slope of the PPF curve indicates the opportunity cost of producing one good over the other.
A Production Possibility Frontier (PPF) is a graphical representation that shows the maximum possible combinations of two goods or services an economy can produce given its limited resources and current technology
Arrange the assumptions of a PPF in a logical order:
1️⃣ Fixed Resources
2️⃣ Fixed Technology
3️⃣ Full Employment
4️⃣ Two Goods or Services
The slope of a PPF reflects the opportunity cost
What does moving along a PPF curve illustrate?
Trade-offs between goods
What does a Production Possibility Frontier (PPF) graph represent?
Maximum possible combinations
The PPF curve is typically concave to the origin, reflecting increasing opportunity costs.
True
What does an efficient point on the PPF indicate?
Maximum possible production
What does an unattainable point on the PPF represent?
Exceeds current capabilities
What is the definition of a Production Possibility Frontier (PPF)?
Graphical representation of maximum combinations
The PPF curve is typically concave to the origin, indicating increasing opportunity costs as more of one good is produced.
True
Another assumption of the PPF is fixed technology.
A steeper slope of the PPF indicates a higher opportunity cost of producing the good on the x-axis.
True
The slope of the PPF curve represents the opportunity cost
What is the purpose of interpreting a PPF graph?
Understand trade-offs and constraints
Inefficient points on a PPF indicate underutilization of resources.
True
An increase in resources causes the PPF curve to shift outward.