What are two factors that can cause the PPC to shift outward?
Increased resources, improved technology
Why is the PPC concave to the origin?
Increasing opportunity cost
Resources include land, labor, and capital
What does PPC stand for?
Production Possibilities Curve
Arrange the characteristics of the PPC in the correct order:
1️⃣ Downward-sloping
2️⃣ Concave to the origin
3️⃣ Shifts outward with growth
Technological advancements would shift the PPC outward
Technological advancements cause the PPC to shift outward
An increase in resources causes the PPC to shift outward
Changes in technology or resources can cause the PPC to shift
A constant opportunity cost results in a PPC with a straight-line shape.
The Production Possibilities Curve (PPC) is a graphical representation showing the maximum combinations of two goods or services an economy can produce with given resources and technology.
One assumption of the PPC is that the total quantity and quality of available resources remain fixed.
Match the component of the PPC with its description:
Resources ↔️ Inputs used in production
Goods ↔️ Outputs produced from resources
A point on the PPC indicates that resources are used efficiently and production is attainable.
Match the type of PPC with its characteristic:
Linear PPC ↔️ Constant opportunity cost
Curved PPC ↔️ Increasing opportunity cost
The PPC is concave to the origin because the opportunity cost of producing additional units of a good increases.
True
Full employment is an assumption of the PPC, meaning all resources are being used without idle capacity.
True
Unemployment would cause production to occur inside the PPC.
True
Technological advancements would shift the PPC outward
A point on the PPC represents resources being fully and efficiently employed
The assumption of fixed resources means the total quantity of available resources changes over time.
False
Violating the assumptions of the PPC does not affect its accuracy in resource allocation analysis.
False
What effect does technological advancement have on the Production Possibilities Curve (PPC)?
Shifts the PPC outward
How does the introduction of automation in manufacturing affect the PPC?
Shifts the PPC outward
Opportunity cost on a PPC represents the foregone production due to the reallocation of resources.
True
If an economy can produce 100 apples or 50 oranges, and switches to 75 apples and 12.5 oranges, the opportunity cost of 12.5 oranges is 25 apples.
True
What does the concavity of the PPC to the origin indicate?
Increasing opportunity cost
Efficient production, as assumed in the PPC, minimizes waste of resources.
True
What effect does technological advancement have on the PPC?
Shifts the PPC outward
What does a point outside the PPC represent?
Unattainable production
The PPC is downward-sloping because it indicates a tradeoff
One assumption of the PPC is fixed resources
What does the assumption of fixed resources imply for the PPC?
PPC cannot shift
Match the PPC component with its description:
Resources ↔️ Inputs used in production
Goods ↔️ Outputs produced from resources
The PPC illustrates the tradeoff between producing different goods with fixed resources
True
What does an outward shift of the PPC indicate?
Economic growth
What does full employment imply in the context of the PPC?
No idle resource capacity
Give an example of a technological advancement that could shift the PPC outward.