Economics 0455 · IGCSE · Production possibility curve (PPC) diagrams
Production possibility curve (PPC) diagrams — practice question
In Greece, households with high incomes spend more than the typical household. The level of spending in an economy affects whether production is located on or within its production possibility curve (PPC). In 2020, household spending in Greece declined. This influenced some firms’ intentions to merge. It also raised unemployment. More than half of the unemployed people in Greece had been jobless for over a year.
(a)[2]
Identify two separate reasons why rich households spend more than the average household.
(b)[4]
Explain the significance of a production point inside a PPC and a production point on the PPC.
(c)[6]
Analyse why someone who has been unemployed for more than a year may fail to obtain another job.
(d)[8]
Discuss whether a government should encourage firms to merge or not.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Larger incomes” …