If opportunity costs are constant
, a straight-line (linear) PPF is produced. This case reflects a situation where resources are not specialised and can be substituted for each other with no added cost.
Which of the following is true of the production possibilities curve?
Which of the following is true of a production possibilities curve? It
reveals the maximum amount of any two goods that can be produced from a fixed quantity of resources
. … It permits people to expand production and achieve rates of output that would otherwise be unattainable.
What is true of the production possibility frontier?
In business analysis, the production possibility frontier (PPF) is
a curve illustrating the varying amounts of two products that can be produced when both depend on the same finite resources
. The PPF demonstrates that the production of one commodity may increase only if the production of the other commodity decreases.
What is the importance of production possibility frontier?
The PPF is extremely important in
describing a range of economic phenomena
. The PPF can be used to explain the concept of opportunity cost: Rather than measuring costs in dollars which are rather arbitrary (and change with inflation), we can measure the cost of producing one good in terms of not producing other goods.
Which of the following is correct about a production possibilities frontier?
The correct answer is c)
An economy can produce at any point on or inside
the production possibilities frontier, but not outside the frontier.
Why is PPC concave?
Production Possibility Curve (PPC) is concave to the
origin because of the increasing opportunity cost
. As we move down along the PPC, to produce each additional unit of one good, more and more units of other good need to be sacrificed. … And this causes the concave shape of PPC.
Why is the production possibility frontier bowed?
Key model. 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. … The bowed out shape of the PPC in Figure 1 indicates
that there are increasing opportunity costs of production
.
Which of the following is the best example of physical capital?
| Question Answer | which of the following is the best example of physical capital ? a truck for a delivery company | when making a decision, the next best alternative is called the opportunity cost |
|---|
What are the three basic questions faced by every economy?
- What to produce? ➢ What should be produced in a world with limited resources? …
- How to produce? ➢ What resources should be used? …
- Who consumes what is produced? ➢ Who acquires the product?
Why is it inefficient for an economy to be inside the production possibilities frontier?
All choices on the PPF in this graph, including A, B, C, D, and F, display productive efficiency. … However, any choice inside the production possibilities frontier is productively inefficient and wasteful
because it is possible to produce more of one good, the other good, or some combination of both goods.
What are the four factors of production?
Economists divide the factors of production into four categories:
land, labor, capital, and entrepreneurship
. The first factor of production is land, but this includes any natural resource used to produce goods and services. This includes not just land, but anything that comes from the land.
How do you calculate the production possibility frontier?
To calculate the production possibility frontier,
choose two variables to compare and create a column within the spreadsheet for each variable
. After filling the columns with each variable's values, each row will have values that represent a data set that can be compared to determine production possibility values.
Which of the following is an assumption of production possibility frontier?
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 production possibility curve 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.
What is production possibilities frontier example?
Definition and Examples of the Production Possibilities Curve. The curve
measures the trade-off between producing one good versus another
. For example, say an economy produces 20,000 oranges and 120,000 apples. … If it wants to produce more oranges, it must produce fewer apples.
What is production possibility frontier Class 11?
Definition: Production possibility frontier is the
graph which indicates the various production possibilities of two commodities when resources are fixed
. The production of one commodity can only be increased by sacrificing the production of the other commodity.
