Economics > Class Notes > Pearson Edexcel A-level Economics Unit 1 Complete Revision Notes(WEC11) (All)

Pearson Edexcel A-level Economics Unit 1 Complete Revision Notes(WEC11)

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PRODUCTION POSSIBILITY FRONTIER (PPF) Maximumproductive potential of an economy when resources are both fully and efficiently employed - to produce a combination of goods (assumed to be capital an ... d consumer goods) • Any point inside the curve such as ‘A’ is achieveable but not efficient, as the country is not maximising its productive potential. • Any point outside the curve such as ‘B’ is unattainable; the country does not have enough resources to achieve that lebel of production. CRITICAL ASSUMPTIONS • Resources are fixed • Technology doesn’t change (is constant) • Without these assumptions, the PPF is able to shift IMPLICATION • If PPF shifts (outwards or inwards), it’s the result of a change in technology, or a change in the quality or quantity of resources, our 2 assumptions above • Change in the quantity of resources or technology can be caused by any number of factors, such as: ‐ Natural disasters - flooding, wildfires ‐ Migration - brain drain ‐ Fall in educationspending - resulting in a less skilled workforce ‐ War MOVEMENTS VERSUS SHIFT IN PPF • Movements along the PPF are due to a change in the combination of goods produced • If the PPF shifts outwards or inwards, it is due to a change in the productive potential of the economy - which itself is caused by a change in either the amount of resources or technology available [Show More]

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