explain the effect of economic growth in PPC
Answers
Explanation:
Economic growth in the production possibilities curve (PPC) model. The production possibilities curve illustrates the maximum combination of output of two goods that an economy can produce, such as capital goods and consumption goods. If that curve shifts out, the capacity to produce has increased.
Answer:
Description of the effect of economic growth in PPC
Explanation:
Production possibility curve shows graphical presentation of various combination of two goods that can be produced with available technologies and given resources are fully and efficiently employed (utilised)
Assumption to draw Production possibility curve:
1. The resources available are fixed.
2. The technology remains unchanged
3. The resources are fully employed.
If the resources are not fully employed or efficiently employed it changes the shapes of the PPC which effect economic growth.
If the resources increase it change the shape of PPC which shift PPC curve towards rightward which shows the growth of economic.
If the resources decrease it changes the shapes of PPC which shift PPC curve towards leftward which the decline in the economic.
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