The PPF captures the concepts of scarcity, choice, and tradeoffs. … The slope of the PPF indicates
the opportunity cost of producing one good versus the other good
, and the opportunity cost can be compared to the opportunity costs of another producer to determine comparative advantage.
What does the downward slope of PPF indicate?
The downward slope of the production possibilities curve is
an implication of scarcity
. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. Such an allocation implies that the law of increasing opportunity cost will hold.
What does the slope of PPF indicate explain?
The slope of PPF indicates
the relative marginal cost of two goods that is the opportunity cost of one good in terms of another
. PPF shows all the maximum possible combination of two goods, which can be produced with the given level of resources and technology.
What does the slope of a PPC represent?
The slope of any PPC equals
the marginal cost of producing x
, so if the slopes of the two PPC’s are equal, then A’s marginal cost of producing x is equal to B’s marginal cost, and production is efficient.
What does the slope of PPF indicate Class 11?
(i) Its downward slope indicates that
more of one good can be produced only by taking resources away from the production of another good
. … (ii) Its concave shape indicates that more and more units of one commodity have to be sacrifice to gain an additional unit of another commodity.
Why is a PPF curved?
The first is the fact that the budget constraint is a straight line. This is because its slope is given by the relative prices of the two goods. In contrast, the PPF has a curved shape
because of the law of the diminishing returns
.
Why is PPC downward sloping 11?
The downward sloping nature of the PPC is
due to the law of increasing opportunity cost
. According to this law, with the fuller utilisation of the given resources, in order to produce an additional unit of one good, some of the resources are to be withdrawn from the production of another good.
Is the PPF always concave?
PPF can be convex to the origin if MRT is decreasing, i.e. less and less units of a commodity are sacrificed to gain an additional unit of another commodity. In such case, PPF will be a convex shaped curve as shown in Fig. … So, PPF
is always concave shaped
.
What will be the shape of PPC if MRT is increasing?
If increasing MRT leads to
concave shape
of PPC.
What would it mean if the slope of the PPF is steeper or flatter?
More generally, as society produces more and more of some good or service,
the cost of production grows larger and larger relative to the cost of producing other goods or services
. Thus, the slope of a PPF starts flat and becomes increasingly steeper. … For society, there are many scarce resources.
How does the slope of the PPF reflect the cost of producing a good?
The slope of a production possibilities curve
illustrates the tradeoff between the production of two goods
. This tradeoff occurs due to limited resources. If all available resources are engaged production, then an increase in the production of one good requires a reduction in the production of the other good.
Can the PPF shift explain with diagram?
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 are the 4 assumptions of PPC?
The four key assumptions underlying production possibilities analysis are: (1) resources are used to produce one or both of only two goods, (2) the quantities of the resources do not change, (3) technology and production techniques do not change, and
(4) resources are used in a technically efficient way.
What is PPC 11th?
Production possibility frontier or production possibility curve (PPC) PPC is a curve which
shows all possible combinations of two
set of goods that an economy can produce with available resources and given technology, assuming that all resources are fully and efficiently utilized. COMBINATION.
What does PPC mean?
Key terms. Term. Definition.
production possibilities curve
(PPC) (also called a production possibilities frontier) a graphical model that represents all of the different combinations of two goods that can be produced; the PPC captures scarcity of resources and opportunity costs.
