Define the term production possibility curve.
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Define the term production possibility curve.
A production possibility curve is an economic model that considers the maximum possible production (output) that a country can generate if it uses all of its factors of production to produce only two goods or services.
What does the term capital goods mean?
Capital goods are assets that help a firm or nation produce output (manufacturing), e.g. a robotic arm in a car manufacturing company.
What are consumer goods?
Consumer goods are end products and have no future productive use, e.g. a watch.
True or False?
Producing at any point on the production possibility curve represents productive efficiency.
True.
Producing at any point on the production possibility curve represents productive efficiency.
Define the term opportunity cost.
Opportunity cost is the loss of the next best alternative when making a decision.
How is economic growth illustrated on a production possibility curve?
Economic growth occurs when there is an increase in the productive potential of an economy, illustrated by an outward shift of the entire production possibility curve.
Define the term factors of production.
Factors of production are the resources (land, labour, capital, and enterprise) used to produce goods and services.
What does an inward shift of the production possibility curve represent?
An inward shift of the production possibility curve represents economic decline.
True or False?
Any point outside the production possibility curve is attainable.
False.
Any point outside the production possibility curve is unattainable.
Define the term economic decline.
Economic decline occurs when there is any impact on an economy that reduces the quantity or quality of the factors of production.