define production possibilities curve. state it's two properties
Answers
Answer:
production possibilities curve, also known as production possibility frontier is a curve which shows various combinations of the amounts of two goods which can be produced within the given resources and technology/a graphical representation showing all the possible options of output for two products that can be produced using all factors of production, where the given resources are fully and efficiently utilized per unit time.
below there are two properties of a PPC/ppf
1) Concave to Origin: PPC curve is concave to the origin. This is because of the increasing opportunity cost i.e. in accordance with the law of increasing opportunity cost.
2)Increasing Marginal Rate of Transformation: The slope of PPC (MRT) shows, for the production of every additional unit of one good, more and more units of other good has to be sacrificed. In other words, as we move down along the PPC, the slope of PPC (or MRT) increases.
Answer:
The correct answer to this question is the production possibility curve slopes downhill from left to right because the resources are constant and the inverse relationship between the two variables in the equation causes one to increase before the other declines and vice versa.
Explanation:
Given - The production possibilities curve
To Find - Define the production possibilities curve. state its two properties.
Two fundamental characteristics of the production possibility curve are: The production possibility curve slopes downhill from left to right because the resources are constant and the inverse relationship between the two variables in the equation causes one to increase before the other declines and vice versa.
The graph is known as the production possibilities curve (PPC) illustrates all the possible output combinations that can be created using the available resources and technology. The PPC sometimes referred to as the production possibilities frontier (PPF), depicts scarcity and tradeoffs.
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