Production Possibility Frontier The PPF is a curve showing the maximum combinations of goods or services that can be produced in a given period with available resources Cakes

Production Possibility Frontier What idea is the curve representing? Cakes

Production Possibility Frontier The curve represents the idea that if the producer chooses to produce more of one good, then the producer simultaneously chooses to produce less of the other good. Cakes

Production Possibility Frontier If the baker is currently producing at point A but finds demand for cakes goes up and therefore decides to produce 800 cakes, what impact does this have on the production of bread? Cakes

Production Possibility Frontier If the baker is currently producing at point A but finds demand for cakes goes up and therefore decides to produce 800 cakes, what impact does this have on the production of bread? Opportunity Cost Fall of 200 units of bread being produced Cakes

Production Possibility Frontier Explain what is happening at point ‘D’ Resources are being used inefficiently Cakes

Production Possibility Frontier Explain what is happening at point ‘C’ There are not enough resources to produce at point ‘C’ – Resources are scarce Cakes

How is the PPF for an economy shown? The PPF for an economy is drawn on the assumption that all resources in the economy are fully and efficiently employed ?

How is the PPF for an economy shown? The PPF for an economy is drawn on the assumption that all resources in the economy are fully and efficiently employed If there are unemployed workers or idle factories, or if production is inefficiently organised then an economy cannot produce on its PPF

What does a shift of PPF show? Capital Goods Economic Growth PPF0 PPF1 Consumer Goods

List at least 3 causes of a shift of PPF If the economy is producing capital goods, then in the following period its capacity to produce should increase as it will have more resources available for production Increase in innovation Increase in employment Improved management processes

May 2013

MAY 2013

May 2012

MAY 2012

MAY 2010