Production possibilities frontier framework – Flashcards

the possible combinations of two goods that can be produced in a certain period of time under the conditions of a given state of technology and fully employed resources

as more of a good is produced, the opportunity costs of producing that good increase

the condition where the maximum output is produced with the given resources and technology

the condition where less than the maximum output is produced with the given resources and technology

the condition where less than the maximum output is produced with the given resources and technology; implies that more of one good can be produced without any less of another being produced

the body of skills and knowledge involved in the use of resources in production; commonly increase the ability to produce more output with a fixed amount of resources or the ability to produce the same output with fewer resources

the situation where someone can produce a good at lower opportunity cost than someone else can

1. scarcity 2.choice 3. opportunity cost 4. productive efficiency 5. productive inefficiency 6. unemployed resources 7. economic growth

represents the law of increasing opportunity costs: increased production of one good comes at an increasing cost

represents constant opportunity costs: increased production of one good comes at a constant opportunity cost

is illustrated by the fact that we have to find a point either on or below the frontier (one of the seven various elements of PPF)

is illustrated by a movement from one point to another on the PPF (one of the seven various elements of PPF)

illustrated by the frontier itself (one of the seven various elements of PPF)

illustrated by and points below the PPF (two of the seven various elements of PPF)

illustrated by a point on the PPF (two of the seven various elements of PPF)

illustrated by a shift outward in the PPF (one of the seven various elements of PPF)