Production Possibility Frontiers | A-Level Economics Notes
These revision notes cover everything you need to know about Production Possibility Frontiers for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017.
What are the four factors of production?
CELL
Capital - machinery
Enterprise - business owners/ ideas
Land - raw materials
Labour - workers
What does a production possibility frontier (PPF) show?
A PPF shows the combination of goods and services an economy can produce using its available factors of production. We assume they can produce just two types of goods and services in this economy.
Describe the points on the boundary
All points on the boundary are efficient. A and B are different combinations that produce the maximum possible output with the available factors of production.
Describe the points inside the boundary
Points inside the boundary are inefficient as factors of production are not being fully utilised.
Describe the point outside the boundary
Points outside the boundary are unattainable with the available factors of production.
Are points on the boundary productively efficient?
Productive efficiency is when we are producing the highest possible output with the available factors of production.
All points on the boundary are productively efficient.
Are points on the boundary allocatively efficient?
Not all points on the boundary are allocatively efficient. This depends on society's preferences.
Describe an outward shift in the PPF
An outward shift in the PPF shows long-run economic growth. This can be linked to supply-side policies.
Summary questions
- What are the four factors of production?
- What does a PPF show?
- Describe the points on the boundary
- Describe the points inside the boundary
- Describe the point outside the boundary
- Are points on the boundary productively efficient?
- Are points on the boundary allocatively efficient?
- Describe an outward shift in the PPF
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