Read and construct PPC diagrams to distinguish attainable output combinations, trace opportunity cost and explain movements or shifts caused by changes in resources and technology.
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.
Sweden has a mixed economic system. In 2018, it was operating at a point inside its production possibility curve (PPC). In 2018, the country's schools employed nearly 2500 extra teachers. A few of these had previously been actors. A higher number had previously been government officials involved with regulation of Swedish monopolies.
Explain the difference between a point inside a PPC and a point outside a PPC.
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?
W to X
W to Y
X to W
Z to X