Economics 2281 · O Level · Production possibility curve (PPC) diagrams
Production possibility curve (PPC) diagrams — practice question
During 2021, the UK’s production point on its production possibility curve (PPC) shifted. Mean wages rose. A waiter had an average annual wage of $23,580, whereas a chief executive of a large commercial bank earned $1,617,000. Higher wages allow people to dine in restaurants more frequently. Some food sold in UK restaurants is brought in from abroad. In 2021, the UK government entered into free trade agreements with a number of countries, which removed import restrictions.
(a)[2]
Identify two positions at which a production point could appear on a PPC diagram.
(b)[4]
Explain two reasons why someone may switch from eating in one restaurant to eating in another restaurant.
(c)[6]
Analyse why the pay of a chief executive of a large commercial bank is above that of a waiter.
(d)[8]
Discuss whether free trade will increase economic growth or not.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Inside the PPC / to the left of the curve” …