Production Possibilities Curve
This curve shows the maximum combinations of two goods that can be produced with limited resources.
What is the Production Possibilities Curve
What is the study of economics about
This is the primary focus of economics: how people use limited resources to satisfy unlimited wants.
This factor includes natural resources trees land and water.
What is land?
This system relies on tradition and self-sufficiency for decisions.
What is a traditional economy?
A point inside this curve represents inefficient production with wasted resources.
What is a point inside the PPC
What are the three big economic questions
These are the three big questions in economics, including "what to produce, when to produce and whom to produce?
Human effort and skills used in production are known as this factor.
What is labor?
In this economy, the government makes most production decisions.
What is a planned (or command) economy?
This is why the PPC is usually curved rather than straight
Resources don't switch easily, increasing opportunity cost.
This branch of economics focuses on individual choices and markets, unlike the overall national picture.
What is microeconomics?
Man-made aids like tools and machines represent this factor of production.
What is capital
Supply and demand drive production in this type of system.
What is a free market economy?
Moving from one point to another on the PPC, like from B to C, involves giving up some of one good to produce more of the other—this is the term for that sacrifice.
What is Opportunity Cost
In contrast to microeconomics, this studies broad issues like national unemployment or overall economic growth.
What is macroeconomics?
This factor involves organizing the others and taking risks, often rewarded with profit.
What is enterprise?
This system combines free markets with government intervention.
What is a mixed economy?
What causes the PPC to shift outward?
To make an unattainable point like G possible, the PPC must shift outward, which could happen through improvements like better technology or more skilled workers in The Bahamas.
What is the focus of macroeconomics?
National tourism revenue would be analyzed in macroeconomics, while a single business's prices fall under microeconomics—highlighting the scale difference.
What is enterprise?
Enterprise differs from labor by focusing on risk-taking and organization, while capital is man-made and land is natural—essential for combining all in production.
The Bahamas operates this system, blending private business with government roles, unlike purely planned or traditional setups.
What is a mixed economy?