PPF (M)

• What does the PPF show?

  A PPF shows the maximum possible output
• How does a PPF illustrate the concept of opportunity cost?

  The slope of the PPF illustrates opportunity cost of producing one good compared to another.
• What factors would cause an outward shift in a PPF?

  — Increased number of workers would increase the total possible output, shifting the PPF outwards.

  
  

  — Improved technology or training, allowing more output to be produced with the same resources.
• What is the difference between capital and consumer goods?

  Consumer good — the end product a business produces is bought by the consumer.

  
  

  Capital good — Physical assets used by a company to produce goods that are then bought by the consumer.