Economics 0455 · IGCSE · Production possibility curve (PPC) diagrams
Production possibility curve (PPC) diagrams — practice question
During 2021, the production point on the UK’s production possibility curve (PPC) shifted. Average wages rose. The mean yearly wage for a waiter was $23,580, whereas the average annual pay of a chief executive of a large commercial bank was $1,617,000. When wages rise, people can afford to eat out in restaurants more frequently. Some food sold by UK restaurants is brought in from abroad. In 2021, the UK government concluded free trade agreements, which removed import restrictions, with several countries.
(a)[2]
Identify two positions where a production point may be shown on a PPC diagram.
(b)[4]
Explain two reasons why a person might change from eating in one restaurant to eating in another restaurant.
(c)[6]
Analyse why the wage of a chief executive of a large commercial bank is higher than that of a waiter.
(d)[8]
Discuss whether free trade will or will not increase economic growth.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A point inside or below the PPC curve” …