1.2 PPFs

• What is a PPF curve?


  A PPF curve shows the maximum obtainable output that

  an economy can produce if all resources are

  fully and efficiently employed.
• What concepts can the PPF be used to illustrate?


  -economic growth

  -efficiency

  -opportunity cost

  -changes in skills/ technology
• What will cause an outward shift on the PPF curve?

  economic growth- increase in the quality or quantity of the FoP

  
• What will cause an inward shift on the PPF curve?

  economic decline- war, disease, natural disaster etc. These would reduce an economy's capacity to produce goods/ services.

  
• PPF- efficiency


  A- efficient use of resources (productive efficient)

  B- unattainable

  C- inefficient use of resources (productive inefficient)