PPF- productive possibility frontier - N

PPF curve

A graph that illustrates the possible quantities that can be produced of two products if both depend upon the same finite resources for their manufacture.

assumptions of a ppf curve

an economy chooses to produce these two products

there are limited resources

technology and techniques remain constant

all resources(FOP) are fully and efficiently used

Law of increasing opportunity cost

The concept that as an economy moves from one point on the PPF curve to another, the opportunity cost of producing one good increases as more resources are allocated to the production of the other good.

Scarcity

The condition of limited resources relative to unlimited wants, resulting in the need for choices to be made about how resources are allocated.

Opportunity cost

The cost of choosing one option over another, measured by the value of the next best alternative that is foregone.

Free market economics

An economic system characterized by no government intervention in the economic system, including no legislative control over employment, production, or pricing.

Command economics

An economic system characterized by government control, including authority, budget allocation, prioritization, mobilization of resources, and a unique vision, with no profit or private property.

Benefits of free market economics

Contributes to political and civil freedom, economic growth and transparency, and ensures competitive markets.

Benefits of command economics

Low or non-existent unemployment, speed in decision making, equality amongst citizens, and a focus on the workers as opposed to profits.

Problems of free market economics

Subject to manipulation, misinformation, asymmetries of power and knowledge, and fosters wealth inequality.

Problems of command economics

Lack of efficient resource allocation, lack of innovation, and the needs/preferences of society may be ignored due to poor planning.