Question

Explain how the production possibilities curve shows the concepts of scarcity, choice and opportunity cost

Answer 1

Concepts of scarcity, choice and opportunity cost:

Explanation:

• The Production Possibilities Curve (PPC) is a model that depicts the tradeoffs that occur when resources are allocated between the production of two goods.
• Scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions can all be illustrated using the PPC.

• The Production Possibilities Curve (PPC) is a model that incorporates scarcity and the opportunity costs of decisions when presented with the potential of creating two commodities or services.

• While Locations on the PPC's interior are wasteful, points on the PPC are efficient, and points beyond the PPC are unreachable.

• The opportunity cost of switching from one efficient combination of production to another efficient combination of products is the amount of one good that is sacrificed in order to obtain more of the other good.

• The shortage is a concept used in economics to describe the scarcity of resources accessible to us for satisfying our desires. Human desires are limitless, but resources are limited.
• This is true for all types of economies, rich and poor, developed and developing.