Advanced level 2024 South West mock Economics all mark guides

Advanced level 2024 South West mock Economics all mark guides

Advanced level 2024 South West mock Economics all mark guides

PAPPER TWO
QUESTION ONE
The production possibility curve shows the possible combination of two goods a country can produce as
a result of full utilization of resources. It is built on assumptions such as:
 Full utilization of resources
 Production is limited to two goods
 Constant technology
 Mobility of factors of production
 Constant amount of resources.
There are 2 circumstances where increasing the production of consumer and capital goods at the
same time I attainable and one circumstance where it is unattainable:
a) When it is possible
1. When the country is operating below the PPC
This indicates the existence of excess capacity or the availability of idle resources such
that consumer and capital goods can be increased at the same time by simply exploiting
the idle resources and allocating it towards the production of both commodities.
Utilizing idle resources to increase productive capacity will enable the county to move
towards the PPC. A situation called actual economic growth