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The Production Possibilities Frontier and Efficiency The PPF represents what an economy can produce when it PPF and Efficiency is using all its resources efficiently. As long as the economy is producing at a point on its PPF, it is producing at an efficient level and using all its resources. When an economy is already using all its resources N efficiently, it cannot use the same resources to produce something beyond, or outside, its PPF. Therefore, economists say that a point outside an economy's PPF is X unattainable. An economy can produce at a point inside its PPF. However, if an economy is producing at a point inside its PPF, then either the economy is not using all its resources or it is using them inefficiently. Economists label a point inside the PPF underutilization because such a point indicates the economy is underutilizing its resources. Efficiency, unattainablety, and underutilization are shown on the "PPF and Efficiency" graph above. Use the graph to answer questions 9-11. 9. The point that represents an unattainable point is 10. The point that represents underutilization is 11. The economy that is using all its resources efficiently is producing at point Shifts in the Production Possibilities Frontier The location of the PPF for an economy is determined mostly by the amount of resources available and the level of technology in the society. If more resources become available or the level of technology increases, more goods and services can be produced and the PPF will shift to the right (outward). If the amount of resources diminishes, the economy can no longer produce at previous levels and the PPF will shift to the left (inward).Write your answers to questions 12 and 13 in the space provided. 12. What two things would cause the PPF of an economy to shift to the right (outward)? 13. What would cause the PPF of an economy to shift to the left (inward)? Shifts in the PPF Use the "Shifts in the PPF" graph to answer questions 14-19. Assume that the PPF begins at the location labeled "C". Read question 14 and determine the direction (left or right) that the PPF will move from the location C in response to the event described. Then write the letter of the new location. Now read question 15 and determine the direction the PPF will move from the location you decided on in question 15. Then write the letter of the new location. Continue to determine the direction and location for each subsequent event. A B CD 14. The invention of the light bulb allows laborers to work later hours and introduces the midnight shift. Direction of Shift: New Location of PPF: 15. A major drought makes much of America's farmland unproductive. Direction of Shift: New Location of PPF: 16. The baby boomer generation starts to retire, and millions leave the workforce. Direction of Shift: New Location of PPF: 17. The invention of the Internet allows people to communicate and conduct business from anywhere. Direction of Shift: New Location of PPF: 18. The government loosens immigration policies, allowing millions of skilled workers to enter the country. Direction of Shift: New Location of PPF: 19. The invention of the cell phone allows people to communicate from remote locations. Direction of Shift: New Location of PPF: 20. Some economists argue that unemployment is the main issue that should concern government officials, because unemployment represents underutilized resources. Which of the following situations best describes this view of unemployment? A. a point inside the PPF B. a point outside the PPF C. a point on the PPF curve