AP Microeconomics Flashcards: Production Possibilities Curve
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 14 cards to help you master important concepts.
What does an inward shift of the PPC signify?
An inward shift of the PPC signifies economic contraction.
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What does an inward shift of the PPC signify?
An inward shift of the PPC signifies economic contraction.
How is opportunity cost shown on a PPC graph?
Opportunity cost is shown by the amount of one good that must be given up to produce more of another good, represented by movement along the curve.
If a nation discovers a new, abundant source of energy, how would this affect its PPC?
The PPC would shift outward, representing economic growth, because there has been an increase in the factors of production.
On a PPC graph, what does a point inside the curve represent?
A point inside the PPC represents inefficiency or underutilized resources.
What is a Production Possibilities Curve (PPC)?
The PPC is a model used to show the trade-offs associated with allocating resources between the production of two goods.
Using a table of production possibilities, how is the opportunity cost of producing more of one good calculated?
To calculate opportunity cost from a table, you find the difference in the quantity of the good being given up as you move from one production combination to another.
On a PPC graph, what does a point directly on the curve represent?
A point on the PPC represents an efficient allocation of resources, meaning all factors of production are fully utilized.
What are the two general causes for a shift in the PPC?
The PPC can shift due to changes in the factors of production (land, labor, capital) or changes in productivity/technology.
How does the PPC illustrate the concept of trade-offs?
The PPC shows that to produce more of one good, an economy must produce less of another, illustrating the trade-off inherent in resource allocation.
What does an outward shift of the PPC signify?
An outward shift of the PPC signifies economic growth.
What five key economic concepts does the PPC illustrate?
The PPC illustrates the concepts of scarcity, opportunity cost, efficiency, underutilized resources, and economic growth or contraction.
If a new technology improves the productivity of making only one of the two goods on a PPC, how does the curve change?
The PPC will pivot outward on the axis of the good with the technological improvement, as more of that good can be produced with the same resources.
Define economic contraction in the context of a PPC.
Economic contraction is a decrease in an economy's ability to produce goods and services, illustrated by an inward shift of the PPC.
What determines the shape of the Production Possibilities Curve?
The shape of the PPC depends on whether opportunity costs are constant, increasing, or decreasing.