Economics – The basic economic problem - Production possibility curve (PPC) diagrams | e-Consult
The basic economic problem - Production possibility curve (PPC) diagrams (1 questions)
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A shift to the right in the Production Possibility Curve (PPC) indicates economic growth. This can occur due to several factors, including:
- Increase in resources: This could be due to a growth in the population, discovery of new natural resources (e.g., oil, minerals), or an increase in the size of the labour force.
- Technological advancements: Improvements in technology allow for more efficient production, meaning more output can be achieved with the same amount of resources.
- Improvements in skills and training: A more skilled workforce is more productive.
Potential Benefits:
- Higher standard of living: Increased production leads to greater availability of goods and services, improving the standard of living.
- Increased national income: Higher output translates to higher national income.
- Greater economic opportunity: More jobs and investment opportunities.
Potential Drawbacks:
- Environmental concerns: Increased production can lead to increased pollution and resource depletion.
- Income inequality: The benefits of economic growth may not be evenly distributed, potentially increasing income inequality.
- Inflation: Rapid economic growth can sometimes lead to inflation.