๐ Topic Summary
The Production Possibilities Frontier (PPF) is a graph that shows the maximum possible output combinations of two goods or services an economy can produce when all resources are fully and efficiently utilized. It illustrates the concepts of scarcity, opportunity cost, and efficiency. Movements along the PPF involve trade-offs, as producing more of one good means producing less of another. The PPF can shift outward with technological advancements or increased resource availability, indicating economic growth.
๐ง Part A: Vocabulary
Match each term with its correct definition:
- Term: Opportunity Cost
- Term: Efficiency
- Term: Scarcity
- Term: Production Possibilities Frontier
- Term: Economic Growth
- Definition: The condition of limited resources relative to unlimited wants.
- Definition: A curve depicting the maximum output combinations of two goods or services.
- Definition: An increase in the economy's ability to produce goods and services.
- Definition: The value of the next best alternative that must be given up to obtain something.
- Definition: Producing the maximum output with given resources and technology.
โ๏ธ Part B: Fill in the Blanks
Complete the following paragraph using the words provided (not all words will be used): increasing, constant, PPF, resources, opportunity cost, technology, trade-offs, decreasing, bowed outwards.
The ________ represents the boundary of what an economy can produce. Moving along the ________ involves ________, as more of one good can only be produced by producing less of another. This illustrates the concept of ________. The shape of the PPF is often ________, reflecting ________ opportunity costs as ________ are reallocated.
๐ค Part C: Critical Thinking
Explain how technological advancements can shift the Production Possibilities Frontier outward. Provide a real-world example.