What would cause the entire PPC to shift outwards?
Therefore to achieve any point beyond PPC, there is need for increase in the present supply of resources and technology which leads to an outward shift in PPC as overall production increases which results in economic growth.
Why is PPC concave to the origin?
Ans. PPC looks concave to the origin because of increasing marginal rate of transformation/substitution (or increasing marginal opportunity cost). It means that more and more units of commodity ‘y’ are to be sacrificed, to get each additional unit of commodity ‘x’.
What are the 4 assumptions of the PPC?
The four key 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 does a concave PPC mean?
production possibility curve
Why is PPF not straight?
It’s impossible to draw a straight line through those 3 points. The PPF is the collection of all output combinations possible, that are efficient. Inside the PPF curve is inefficient or involves unemployed workers. The PPF curve can be for a single company or producer, or for the economy as a whole.
In what circumstances would the PPF be a straight line?
In the context of a PPF, opportunity cost is directly related to the shape of the curve (see below). If the shape of the PPF curve is a straight-line, the opportunity cost is constant as production of different goods is changing.
What determines the shape of a country’s PPF?
The shape of the PPF depends on whether there are increasing, decreasing, or constant costs. The slope of the PPF indicates the opportunity cost of producing one good versus the other good, and the opportunity cost can be compared to the opportunity costs of another producer to determine comparative advantage.
What is unattainable point?
These points are attainable (e.g., point U), but they are not using the resources at the fullest. At point U, if technology or resources are used at full capacity, the economy could be at point B or C, meaning more would be produced. All points outside PPF are unattainable (e.g., point Z).
What conditions must be present for productive efficiency?
What conditions must be present for productive efficiency? Given available inputs and technology, it is impossible to produce more of one good without decreasing the quantity that is produced of another good.
What is PPC explain?
PPC stands for pay-per-click, a model of internet marketing in which advertisers pay a fee each time one of their ads is clicked. It allows advertisers to bid for ad placement in a search engine’s sponsored links when someone searches on a keyword that is related to their business offering.
What is the shape of PPC and why?
Shape of PPC has concave, convex and linear, it is depend on opportunity cost. The curve of PPC shows concave. This is due to increasing of opportunity cost. The opportunity cost of guns is calculated based on how much butter has been given up in order to produce more unit of guns by the country, and vice versa.
Which is the common shape of PPC?
The usual shape of PPC is concave towards the origin because the oppurtunity cost of producing a good increases when we produce more of that good. PPC is concave to the point of origin because of rising marginal opportunity cost.
What will be the shape of PPC when?
Therefore, if marginal opportunity cost remains constant then Production possibility curve will be a straight line owing to constant slope of the line.
Can PPC be convex?
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 if PPC is convex to Origin?
Therefore the PPC curve can be convex to the origin when the opportunity cost decreases. This can happen only when less and less units are forgone of first commodity for the introduction of additional unit of another commodity. …
What are the 3 shifters of PPC?
Terms in this set (3)
- Shifters of the PPC (3) Change in resource quantity. Change in technology. Change in trade.
- Demand Curve Shifters (5) Change in Taste and Preference. Number of Consumers. Price of Related Goods. Income.
- Supply Curve Shifters (6) Prices / Availability of Inputs. Number of Sellers. Technology.
Is PPC always 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.
Why is PPC concave 11?
Since resources are use specific, therefore every time when one more unit of a commodity is produced more units of the other commodity are sacrificed that results in increasing marginal opportunity cost which leads to the concave shape of the production possibility curve.
Why is PPC called opportunity cost?
Production Possibility Curve is called the opportunity cost curve as it is the curve which shows the combinations of two goods and services that can be produced with fuller utilisation of a given amount of resources in the most efficient way and with a given production technology. PPC is concave to origin.
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.
Is the PPF positively or negatively sloped Why?
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. As time passes, the production possibilities frontier shifts outward due to the accumulation of inputs and technological progress.
How can trade affect the movement of PPC?
According to Samuelson, trade extends the Production Possibility Frontier. This is, indeed, accurate as trade has the same effect as an injection of capital in the economy or an improvement in technology. Given that it is producing on the PPC, this signifies that all resources are being fully utilised.