What is an example of production possibilities frontier?
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What is an example of production possibilities frontier?
For example, if a company develops a new technology that can speed up making cheese, the output would also increase. This increase in production will shift the curve outwards as long as the other production factors remain constant. On the other hand, the curve can also shift inwards during times of economic hardships.
What is the production possibilities frontier explain through graph?
The Production Possibilities Frontier (PPF) is a graph that shows all the different combinations of output of two goods that can be produced using available resources and technology. The PPF captures the concepts of scarcity, choice, and tradeoffs.
What is PPC .explain it with table and graph?
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 the shape of production possibility curve?
The shape of a PPF is commonly drawn as concave to the origin to represent increasing opportunity cost with increased output of a good.
Why is PPC curve concave?
Answer: PPC is concave shaped because of increasing marginal rate of transformation. It implies that more and more units of commodity sacrificed to gain an additional unit of another commodity. PPC is convex shaped because of decreasing marginal rate of transformation.
What is the shape and slope of the production possibility curve?
A production possibilities curve shows the combinations of two goods an economy is capable of producing. 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.
What is slope of PPC?
The slope of production possibility curve is marginal opportunity cost or marginal rate of transformation which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other.
Why is PPC negatively sloped?
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.
