What is meant by production possibility curve?
In business analysis, the production possibility frontier (PPF) is a curve that illustrates the variations in the amounts that can be produced of two products if both depend upon the same finite resource for their manufacture. The PPF is also referred to as the production possibility curve or the transformation curve.
Why is PPC concave?
PPC is concave to the origin because of increasing Marginal opportunity cost. This is because inorder to increase the production of one good by 1 unit more and more units of the other good have to be sacriced since the resources are limited and are not equally efficient in the production of both the goods.
Can a PPC be upward sloping?
1 Expert Answer No, When you exand production of one good you must reduce production of some other good in order to produce it.
Why is PPC negatively sloped?
The negative slope of the production possibilities curve reflects the scarcity of the plant’s capital and labor. Producing more snowboards requires shifting resources out of ski production and thus producing fewer skis.
Why is a PPC downward sloping?
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utilisation of the given resources, in order to produce an additional unit of one good, some of the resources are to be withdrawn from the production of another good.
Why PPC is convex to the origin?
The production possibility curve is convex outward from the origin because some of the economy’s resources are better able to produce good X than good Y while other resources in the economy are better able to produce good Y than good X. Capital resources, can be assumed to be equally able to produce food or housing.
What causes the PPC to shift to the right?
factors causing shift the ppc. Shifts in the production possibilities curve are caused by things that change the output of an economy, including advances in technology, changes in resources, more education or training (that’s what we call human capital) and changes in the labor force.
What is production possibility curve Class 11?
In business, the Production Possibility Curve (PPC) is applied to evaluate the performance of a manufacturing system when two commodities are manufactured together. When a firm diverts its resources to produce commodity B, the production of commodity A will reduce.
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 types of production possibility curves?
There are 3 types of production possibility curve which are straight-line sloping down, concave and convex curve. The first type of curve has a constant negative gradient or constant ratio which also means that as one item/good decreases by one, the other item/good will increase by one, and it will always be constant.
What are the 3 economic goals?
The United States and most other countries have three main macroeconomic goals: economic growth, full employment, and price stability. A nation’s economic well-being depends on carefully defining these goals and choosing the best economic policies for achieving them.
What are the 8 economic goals?
ECONOMIC GOALS The following is a list of the major economic goals: 1) economic growth, 2) price level stability, 3) economic efficiency, 4) full employment, 5) balanced trade, 6) economic security, 7) equitable distribution of income, and 8) economic freedom.
What is the most important economic goal?
Full employment, stability, and economic growth are the three macroeconomic goals most relevant to the aggregate economy and consequently are of prime importance to the study of macroeconomics.