a) Resources

• a PPF curve

• y-axis = capital goods

• x-axis = consumer goods

• gradient = not constant (line is an outwards curve) and negative

• (the allocation of resources)

• a position below the PPF curve represents…

• a pareto inefficient allocation of resources

• a position below the PPF curve represents a pareto inefficient allocation of resources because…

• some are unemployed

• (the production of capital and consumer goods)

• a position below the PPF curve represents…

• possible production

• (the allocation of resources)

• a position on the PPF curve represents…

• a pareto efficient allocation of resources

• a position on the PPF curve represents a pareto efficient allocation of resources because…

• all are employed

• (the productive potential of the economy)

• a position on the PPF curve represents…

• the maximum productive potential of the economy

• (the production of capital and consumer goods)

• a position on the PPF curve represents…

• possible production

• (the production of capital and consumer goods)

• a position above the PPF curve represents…

• unobtainable production

• a position above the PPF curve represents unobtainable production because…

• there is an insufficient supply of resources

• show how the opportunity cost in capital goods is represented on a graph

• the unit difference between the y-coordinate of the position and where the PPF curve meets the y-axis

• show how the opportunity cost in consumer goods is represented on a graph

• the unit difference between the x-coordinate of the position and where the PPF curve meets the x-axis