PPF

• What does the PPF curve represent?

  Maximum potential output of goods and services
• Why are economists interested in the PPF curve?

  To know how much an economy can produce
• What do we label the x-axis and y-axis on a PPF curve?

  Consumer goods and capital goods
• What does efficiency mean in the context of the PPF curve?

  Optimal decisions for maximum production
• How does the shape of the PPF curve indicate trade-offs?

  As consumer goods increase, capital goods decrease
• What are the two common shapes of PPF curves?

  Bowed out and straight line
• What does being on the PPF curve indicate?

  Economy is using resources efficiently
• What points on the PPF curve are considered productively efficient?

  Points on the curve itself
• What does it mean if a point is inside the PPF curve?

  Resources are being used inefficiently
• What does point H on the PPF curve represent?

  Unobtainable points with current resources
• Why can't both consumer and capital goods be increased simultaneously?

  Resources are limited and must be allocated
• What are the implications of being on the PPF curve?

  • Maximum potential output is achieved
  • Resources are fully utilized
  • No more goods can be produced without trade-offs
• What are the differences between points on, inside, and outside the PPF curve?

  • On the curve: Efficient production
  • Inside the curve: Inefficient production
  • Outside the curve: Unobtainable production
• How can PPF curves be used for different products?

  • To show trade-offs between two products
  • Examples: Houses vs. vehicles
  • Outputs of manufactured goods vs. services
• What does the term 'production possibility frontier' imply?

  • Edge of maximum production capacity
  • All resources are used efficiently
  • Represents trade-offs in production choices