effect on ppc due to various government
Answers
Answer:
Production possibilities curve demonstrates that:
There is a limit to what the society/individual can achieve, given the existing institutions, technology and resources.
Every choice the society/individual makes has an opportunity cost – to get more of one good, we need to give up some of another good – every choice has a tradeoff.
Let’s assume that a country can produce either 15000 units of bags of wheat or 15000 units of guns or a combination of two goods with the full employment of all its available resources. The following production production possibilities table shows possible combinations of this country.
Production of Guns (1000 guns) Production of bags of wheat (1000 bags)
15 0
12 3
9 6
6 9
3 12
0 15
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This production possibility table shows the opportunity cost of each production choice. It specifies the alternative outputs that can be achieved with different levels of inputs. This information is represented on a curve known as Production Possibility Curve as shown below. The downward slope of the PPC represents the opportunity cost concept.
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The curve of production possibilities (PPC) is a graph that displays all of the possible performance variations that can be generated in view of existing resources and technologies. Also named the field of development possibilities (PPF), the PPC exemplifies uncertainty and tradeoffs.
Explanation:
- Given the current institutions, technologies and infrastructure there is a limit on what the society/individual will do.
- Any decision that society / individual creates has an opportunity cost–we need to give up any of another good to get some of one good–any option has a trade off.
- Let's say that a country will generate either 15,000 units of wheat bags or 15,000 units of weapons, or a mixture of two items with maximum use of all the resources available.
Learn more about PPC:
Define ppc and why ppc is downwoard sloping
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