PPF

• Economics


  A social science which studies how humans allocate scarce resources to meet their unlimited wants and needs
• Scarcity


  The degree to which the demand for a product outweighs its supply which drives the economy
• Choice


  The selection of one good or service over another
• Money cost


  The actual cost of a good or service
• Opportunity cost


  The next best alternative which is given up when a choice is made
• Goods


  Tangible items that are used to satisfy wants and needs
• Services


  Actions done that satisfy wants and needs. You can not see or touch a service but can see and touch the results of a service that has been performed
• Production Possibilities Frontier/ Curve/ Boundary

  A graphical representation of the possible levels of production for bundles of two goods assuming all resources are utilised
• Economic efficiency


  An economy where there is both full employment and full production
• Full production


  The economy employs the best available methods (technology-aided) to produce goods and services
• Full production


  • Implies productive efficiency - resources are employed in the most efficient manner, and there is no waste
  • Implies allocative efficiency - the combination of goods produced is what is desired by society
• Full employment


  The economy employs all its resources to produce goods and services
• Productive waste


  Occurs when resources are not employed in the most efficient manner
• Allocative waste


  Occurs when the blend or mixture of goods produced is not the combination desired by society