CAIE IGCSE Economics 1.4 Production Possibility Curve Ppc Diagrams Topic Practice

In 2022, Paraguay's production possibility curve (PPC) shifted to the right. Paraguay has a mixed economic system. Its government provides merit goods and public goods. The country's private sector is a major producer of shampoo. The firms in the shampoo industry make use of division of labour. There are several firms in the industry, but the number is declining. There is a possibility that soon there may be just one firm in the industry.

Identify what is measured on the axes of a production possibility curve.

A country is producing at point X on its production possibility curve (PPC) which shows how it can allocate its production between capital goods and consumer goods.

A period of recession then causes some of its factories to close.
Which point could represent the country's new position?

The diagram shows a production possibility curve (PPC). The economy is using all of its available resources.

A government decides to encourage more production of manufactured goods instead of agricultural goods.

Which movement shows this policy change?