What is Rostow theory?
Rostow’s model summarises economic growth of countries into five different stages: traditional society – characterised by subsistence farming or hunter-gathering. preconditions for take off – manufacturing industry begins to develop, and a country develops an international outlook.
When the preconditions for take off are met a society can take off?
Take-Off. When the preconditions for take-off are met, a society can take off. Educated individuals start inventing new processes and tools, and access to capital through financial markets and banks make it possible to produce goods and services on a larger scale.
What are the obstacles hindrances or deterrents to the Philippine economic development?
The obstacles to Philippine economic development can be summed up as government and its taxes and regulations.
What is an example of opportunity cost in your life?
A student spends three hours and $20 at the movies the night before an exam. The opportunity cost is time spent studying and that money to spend on something else. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment).
Is opportunity cost included in cash flow?
A definition often used for relevant cash flows states that they must be cash flows that occur in the future and are incremental. While not specifically included in the definition of a relevant cash flow (as noted above) opportunity costs are also relevant cash flows.
How do you know if an opportunity cost is increasing or decreasing?
When the PPC is a straight line, opportunity costs are the same no matter how far you move along the curve. When the PPC is concave (bowed out), opportunity costs increase as you move along the curve. When the PPC is convex (bowed in), opportunity costs are decreasing.
What happens when opportunity cost decreases?
Concave: Decreasing Cost (Click the [Concave] button): This is a concave production possibilities curve with decreasing opportunity cost. In this case, opportunity cost actually decreases with greater production. In this case the economy foregoes decreasing amounts of one good when producing more of the other.
Why is opportunity cost a ratio?
Opportunity cost can be expressed first as a marginal unit change, and then as a ratio. The change is a result of the increasing opportunity costs associated with shifting resources from one industry—meat—to the other—vegetables. Such reallocations of expertise in the factors of production are costly for any economy.
What is opportunity cost in PPF?
An opportunity cost will usually arise whenever an economic agent chooses between alternative ways of allocating scarce resources. The opportunity cost of such a decision is the value of the next best alternative use of scarce resources.
What is the law of opportunity cost?
The law of increasing opportunity cost is an economic principle that describes how opportunity costs increase as resources are applied. (In other words, each time resources are allocated, there is a cost of using them for one purpose over another.)
Can opportunity cost zero?
In general, opportunity cost of a resource is zero only when there is general unemployment of resources, including manpower. If there is unemployment of labour, but no idle equipment, it would be possible to build more hospitals by utilising the surplus labour.
What are some examples of opportunity cost?
Examples of Opportunity Cost
- Someone gives up going to see a movie to study for a test in order to get a good grade.
- At the ice cream parlor, you have to choose between rocky road and strawberry.
- A player attends baseball training to be a better player instead of taking a vacation.
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. The second is the absence of specific numbers on the axes of the PPF.
Why is PPF downward sloping?
The production possibilities frontier shows the combinations of goods and services that can be produced efficiently in an economy at a point in time. The production possibilities frontier is downward sloping: producing more of one good requires producing less of others. The production of a good has an opportunity cost.
Which is the more likely shape of a PPF?
Key Concepts and Summary. A production possibilities frontier defines the set of choices society faces for the combinations of goods and services it can produce given the resources available. The shape of the PPF is typically curved outward, rather than straight.
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.