Practice question · Match the pairs
Match each PPF position to its economic meaning.
- On the frontier
- Inside the frontier
- Outside the frontier
- Frontier’s slope
- Unemployment or misallocated resources
- Impossible with current resources and technology
- Full, efficient use of all resources
- Opportunity cost of the horizontal good
Hints
- Position tells you about efficiency; slope tells you about cost.
- A point strictly inside means something is going unused.
Show the answer
- On the frontier → Full, efficient use of all resources
- Inside the frontier → Unemployment or misallocated resources
- Outside the frontier → Impossible with current resources and technology
- Frontier’s slope → Opportunity cost of the horizontal good
Why
The whole diagram in four readings, position tells efficiency, slope tells price.
Practise The Production Possibilities Frontier
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