Table of Contents
What are the attainable production points on a production possibility curve?
Any point that lies either on the production possibilities curve or to the left of it is said to be an attainable point: it can be produced with currently available resources.
What are attainable and unattainable combinations?
In Economical terms, an attainable combination is the set or combination of two goods which is feasible by the economy to manufacture with the available resource allocation and technology. Points on the right on outside the curve represents the unattainable combination of goods.
What does each point on a production possibilities curve show?
The PPF is graphically depicted as an arc, with one commodity represented on the X-axis and the other represented on the Y-axis. Each point on the arc shows the most efficient number of the two commodities that can be produced with available resources.
What do points outside of the production possibility curve represent?
The Production Possibilities Curve (PPC) is a model that captures scarcity and the opportunity costs of choices when faced with the possibility of producing two goods or services. Points on the interior of the PPC are inefficient, points on the PPC are efficient, and points beyond the PPC are unattainable.
What is PPC explain with diagram?
The production possibility curve represents graphically alternative production possibilities open to an economy. The productive resources of the community can be used for the production of various alternative goods. But since they are scarce, a choice has to be made between the alternative goods that can be produced.
Can PPC shift explain with diagram?
Answer. Given the fact that resources are scarce, we have constraints, which is what the curve shows us. When the economy grows and all other things remain constant, we can produce more, so this will cause a shift in the production possibilities curve outward, or to the right.
What is PPC and its properties?
The two basic property of production possibility curve are: It slopes downward from left to right- Production possibility curve slopes downward because both the variables involve in the equation are inversely related as one increase then other one decreases and vice versa because the resources are constant.
What are the two features of PPC?
The two main characteristics of PPC are: Slopes downwards to the right: PPC slopes downwards from left to right. It is because in a situation of fuller utilisation of the given resources, production of both the goods cannot be increased simultaneously.
What are three properties of PPC?
The following are the properties of a PPC. i. Concave to Origin: PPC curve is concave to the origin. Increasing Marginal Rate of Transformation: The slope of PPC (MRT) shows, for the production of every additional unit of one good, more and more units of other good has to be sacrificed.
What is shape of PPC?
The shape of a production possibility curve (PPC) reveals important information about the opportunity cost involved in producing two goods. When the PPC is concave (bowed out), opportunity costs increase as you move along the curve. When the PPC is convex (bowed in), opportunity costs are decreasing.
What if PPC is convex to Origin?
Answer: Therefore the PPC curve can be convex to the origin when the opportunity cost decreases. This can happen only when less and less units are forgone of first commodity for the introduction of additional unit of another commodity. This will lead the Production Possibility Curve to be convex to origin.
What does convex PPC mean?
production possibility curve
What is production possibility curve Toppr?
Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized.
How do you shift the production possibilities curve outward?
Outward or inward shifts in the PPF can be driven by changes in the total amount of available production factors or by advancements in technology. If the total amount of production factors like labor or capital increases, then the economy is able to produce more goods at any point along the frontier.
What can cause a production possibilities curve to shift to the right?
Shifts in the PPF Curve Given the fact that resources are scarce, we have constraints, which is what the curve shows us. When the economy grows and all other things remain constant, we can produce more, so this will cause a shift in the production possibilities curve outward, or to the right.
How is production possibility curve affected by unemployment?
how is production possibility curve affected by unemployment in the economy? explain. due to unemployement output will be less and therefore ppc will shift backward to the left . Massive unemployment does not decrease the capacity of economy to produce so there will be no shift in PPF.
What happens to PPC during recession?
When an economy is in a recession, it is operating inside the PPC. When it is at full employment, it operates on the PPC.
What happens as production of one item switches to the production of another item?
Opportunity cost goes up. According to the law of increasing costs, as production shifts from making one item to another, more and more resources are necessary to increase production of the second item. Therefore, the opportunity cost increases.