1.4 Key terms & Revision Poster
| Key term | Definition |
|---|---|
| Attainable production | A combination of products that an economy is currently capable of producing with its available resources. It is represented by a point on or within a PPC. |
| Consumer products | Goods and services purchased by individuals and households to satisfy their wants and needs. Examples include food, clothing, and entertainment. |
| Economic growth | An increase in the amount of goods and services an economy is capable of producing over time. It can be shown by an outward shift of the PPC. |
| Factors of production | The resources used to produce goods and services in an economy. These are classified as land, labour, capital, and enterprise. |
| Movement (along a PPC) | A change from one point to another on the same curve as resources are reallocated between two products on a PPC diagram. Producing more of one product requires sacrificing some output of the other. |
| Opportunity cost | The next best alternative that is given up when making a choice. On a PPC, it is shown by the amount of one product sacrificed to produce more of another. |
| Productive capacity | The maximum amount of goods and services an economy can produce using its available resources. An increase can shift the PPC outwards, while a decrease can shift it inwards. |
| Producer products | Goods and services used by businesses to help produce other goods and services. Examples include machinery, tools, and equipment. |
| Production possibility curve (PPC) | A diagram showing the maximum combinations of two products that an economy can produce when all its resources are used efficiently. It illustrates concepts such as scarcity, choice, and opportunity cost. |
| Productivity | A measure of the amount of output produced from a given amount of resources. Improvements can increase an economy's productive capacity and shift its PPC outwards. |
| Recession | A sustained decline in the level of economic activity in an economy. A prolonged decline that reduces productive capacity can contribute to an inward shift of the PPC. |
| Scarcity | The basic economic problem that exists because resources are limited while human wants are unlimited. It means choices must be made about how resources are allocated. |
| Shift (of a PPC) | A change in an economy's productive capacity caused by a change in the quantity or quality of its factors of production. An outward movement represents an increase in capacity, while an inward movement represents a decrease. |
| Unattainable production | A combination of products that cannot currently be produced with an economy's available resources. It is represented by a point beyond the PPC. |
| Underutilisation of resources | A situation where some available factors of production are unemployed or used inefficiently. It is represented by a point inside the PPC. |
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