Economics 0455 · IGCSE · Production possibility curve (PPC) diagrams
Production possibility curve (PPC) diagrams — practice question
Businesses combine land, labour, capital and enterprise in different proportions when making their goods. A production possibility diagram can be used to show how a country's resources may be allocated, and how fully those resources are being used.
(a)[2]
What distinction is there between capital and land?
(b)[4]
Explain two reasons why a firm may decide to use more labour and less capital in producing its products.
(c)[6]
Analyse, using a production possibility diagram, the effect on an economy’s output when it changes from full employment to unemployment.
(d)[8]
Discuss whether a country can always have low unemployment and low inflation at the same time.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Capital is made by people; land is a natural resource” …