WORKSHEET
PRODUCTION POSSIBILITY CURVE
Paper 2 style questions:
1. Using a production possibility curve, explain what is meant by opportunity cost. (6
marks)
2. Analyse, using a production possibility curve, the effect of advances in
technology. (6 marks)
3. Using a production possibility curve, analyse the effect of an increase in
unemployment on a country's output. (6 marks)
4. Analyse, using a production possibility curve (PPC) diagram, the effect of a
decrease in the size of a country’s labour force on its economy. [6]
5. Explain the significance of a production point inside a PPC and a production
point on its PPC. [4]
6. Analyse, using a production possibility curve (PPC) diagram, the effect of an
increase in enterprise on an economy. [6]
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Paper 2 style question answers:
1. Using a production possibility curve, explain what is meant by opportunity
cost. (6 marks)
A Production Possibility Curve (PPC) represents the maximum output
combinations of two goods that an economy can produce using its available
resources efficiently. Opportunity cost refers to the next best alternative
foregone when making a choice. On the PPC, moving from one point to another
involves shifting resources from the production of one good to another,
illustrating opportunity cost. For example, if an economy moves from producing
more consumer goods to producing more capital goods, the reduction in
consumer goods represents the opportunity cost.
2. Analyse, using a production possibility curve, the effect of advances in
technology. (6 marks)
Advances in technology lead to improved productivity and efficiency, allowing
more goods to be produced with the same amount of resources. On a PPC
diagram, this is represented by an outward shift of the curve, as the economy can
now produce more of both goods. For example, technological advancements in
agriculture can lead to higher food production without reducing the output of
manufactured goods.
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3. Using a production possibility curve, analyse the effect of an increase in
unemployment on a country’s output. (6 marks)
An increase in unemployment means that not all available labour resources are
being utilized, leading to a decrease in actual output. On a PPC diagram, this is
shown as a movement from a point on the curve to a point inside the curve,
indicating that the economy is producing below its potential. However, the PPC
itself does not shift because the productive capacity of the economy remains
unchanged.
4. Analyse, using a production possibility curve (PPC) diagram, the effect of a
decrease in the size of a country’s labour force on its economy. (6 marks)
A decrease in the labour force reduces the economy’s ability to produce goods
and services, leading to a contraction in productive capacity. This would be
represented by an inward shift of the PPC, as the country is no longer able to
produce as much as before. For example, if a country experiences an aging
population with fewer workers, overall production levels decline.
5. Explain the significance of a production point inside a PPC and a production
point on its PPC. (4 marks)
• A production point inside the PPC indicates inefficiency, where resources are
underutilized due to factors such as unemployment or poor resource allocation.
• A production point on the PPC represents full efficiency, where all resources
are being used optimally to produce the maximum possible output.
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6. Analyse, using a production possibility curve (PPC) diagram, the effect of an
increase in enterprise on an economy. (6 marks)
An increase in enterprise, such as more entrepreneurs starting businesses and
improving resource allocation, leads to greater efficiency and innovation. This
results in an outward shift of the PPC, indicating an increase in the economy’s
productive capacity. More goods and services can be produced due to better
organization of resources, investment in new production methods, and
innovation in business practices.
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Paper 1 style questions
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Paper 1 style questions answer:
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