Production possibility frontiers

Figure 1 shows a production possibility diagram for an economy where goods and services are produced in the private and public sectors. The economy is currently producing at point Y.

Following a change in government, it is decided that the output of public sector goods and services should be increased by VW.

What is the opportunity cost, in terms of private sector output, of this reallocation of

Figure 1 shows the production possibility boundary for petrol-powered cars and electric-powered cars in a country's car industry.

If production has moved from Point A to Point B, which one of the following must be true?

Figure 1 shows the production possibility diagram for an economy producing capital goods and consumer goods.

The opportunity cost of producing an additional unit of capital goods is

Figure 2 shows the production possibility curve for an economy producing capital and consumer goods.

The opportunity cost of increasing the output of capital goods from G₁ to G₂ is shown by

Explain how a production possibility diagram can be used to illustrate some features of the fundamental economic problem.

The diagram below shows the production possibility frontier for an economy that produces consumer goods and capital goods. The economy is initially operating at point X within its frontier.

If the economy now moves from point X to point Y on its frontier it will