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What is a production possibility frontier curve?
Basically the PPC represents the hypothetical amount of two different goods that could be obtained by using resources from the production of one for the production of the other. It also describes society's choice between two different goods. When a point is on the curve it means all the resources for those goods is at full employment, anything under the curve is at under-employment, and anything beyond the curve indicates potential growth.
Why does the production possibilities curve bow out from the origin?
The production possibility curve (PPC) is a two dimensional model, showing how resources can be used to produce two different goods or services or types of good and services. The graph is bowed outwards due to a basic concept used in economics - the principle of increasing cost. If a producer were to produce more of one good or service, the constant in resources and technology would not be able to maintain the previous amount of production of the other good or service. If more of one good or service is produced, the opportunity cost of the reduction of the other good or service increases, therefore the gradient of the curve increases.
Explain why a production possibilities curve is concave?
Because when one produces one product, the opportunity cost of the other product increases i.e. the concave represents the increasing opportunity cost with the production of a good.
Why do car manufacturers give both power curve and torque curve when one is a direct function of the other?
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Is curve the opposite of straight?
Curve is one possible opposite of straight if straight refers to line that does not bend. Other meanings of straight like honest, heterosexual, and direct have different opposites than curve.
What are the other names for production possibility boundary?
other names for production possibility boundary are: production possibility curve production possibility frontier transformation curve.
What are other names of production possibility frontier?
production possibility curve
Does the production possibilities curve slope downward?
Yes, production possibility curve slopes downwards to the right indicating that the economy has to forgo some quantity of one commodity to have more quantity of other commodity.
Illustrate on Production Possibility Frontier diagram if the economy experiences a technological boom?
In economics, the production possibility frontier (the PPF, also called the production possibilities curve (PPC) or the "transformation curve") is a graph that depicts the trade-off between any two items produced. It indicates the opportunity cost of increasing one item's production in terms of the units of the other forgone. ( hope you can build on this) -- BY ASMA In economics, the production possibility frontier (the PPF, also called the production possibilities curve (PPC) or the "transformation curve") is a graph that depicts the trade-off between any two items produced. It indicates the opportunity cost of increasing one item's production in terms of the units of the other forgone. ( hope you can build on this) -- BY ASMA
What is the most common shape of a production possibility curve Explain why this is so?
The most common shape of a Production Possibility Curve (PPC) is a concave bulging in towards the origin (or a quarter circle from one axis to the other.) This is due to the fact that as the production in one goods increase, the opportunity cost of producing the extra of that good (or the amount of Good B that it has to give up) become less.
What is a production possibility frontier curve?
Basically the PPC represents the hypothetical amount of two different goods that could be obtained by using resources from the production of one for the production of the other. It also describes society's choice between two different goods. When a point is on the curve it means all the resources for those goods is at full employment, anything under the curve is at under-employment, and anything beyond the curve indicates potential growth.
What is difference between opportunity cost curve and production possibility curve?
Production possibility curve represent the production of an economy by using the all possible factor of production and Opportunity cost curve show that a person move from one department , industry etc to another for better opportunity or better salary.
Describe the production possibility curve?
Graphical representation of the alternative combinations of the amounts of two goods or services that an economy can produce by transferring resources from one good or service to the other. This curve helps in determining what quantity of a non-essential good or a service an economy can afford to produce without jeopardizing the required production of an essential good or service. Also called transformation curve.
Why a production possibility is concave?
A production possibility curve is concave because of the law of diminishing returns. As more resources are allocated to one good over the other, the opportunity cost increases, which leads to decreasing marginal rates of substitution. This results in a concave curve that shows the trade-off between producing different goods.
Why does the production possibilities curve bow out from the origin?
The production possibility curve (PPC) is a two dimensional model, showing how resources can be used to produce two different goods or services or types of good and services. The graph is bowed outwards due to a basic concept used in economics - the principle of increasing cost. If a producer were to produce more of one good or service, the constant in resources and technology would not be able to maintain the previous amount of production of the other good or service. If more of one good or service is produced, the opportunity cost of the reduction of the other good or service increases, therefore the gradient of the curve increases.
What are the four things shown on the production possibility curve?
The production possibility curve is a graph that shows the combinations of two goods that a firm or a nation can create. On the X axis is one good, and on the Y axis is another good. The curve itself shows the combination of goods at maximum efficiency. This curve implies that anything above the curve cannot be produced. If production is inside the curve then the firm or individual is being inefficient and not producing to maximum capacity. If the curve is a straight line this implies that there are no diminishing returns, that no matter how much you produce one good the firm or individual will always produce the same number of goods. The slope of a straight production possibility curve is the opportunity costs of those goods; as an individual or firm decreases the time to produce one good it is able to increase the time to produce the other good. This is compared to a bowed curve which implies diminishing returns. Diminishing returns implies that the returns to labor decrease as a firm or individual produces more of a certain good. This is the concept of the low hanging fruit principle, it takes less time to produce initially because the firm or individual picks the lowest hanging fruit first and then as the number of low hanging fruits dissipates it takes more effort and labor to pick the harder to get fruits. A curve can also imply the diversity of skills in a given population. If we assume that the low hanging fruit principle doesn't exist, we cannot assume that all people in a population will be equally good at a certain task. In order to produce more of a given product a firm will first hire the best individuals for the task and then inevitably will have to hire individuals that are worse at the job, reducing the returns for a given person.
How can production possibilities frontier explain law of increasing opportunity cost?
The shape of the curve is convex to the origin which shows increasing opportunity cost. Consider the changes in reduction of one good's output as production of the other good is increased by the same amount. as the reduction progresses it will become greater due to steeper gradient.
