How are the central economic problems represented in a ppc?
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The problem of choice between relatively scarce commodities due to limited productive resources with the society can be illustrated with the help of a geometric device, is known as production possibility curve. Production possibility curve shows the menu of choice along which a society can choose to substitute one good for another, assuming a given state of technology and given total resources.
The explanation and analysis of production possibility curve is based upon certain assumptions, some of them are following
(i) The time period does not change. It remains the same throughout the curve.
(ii) Techniques of production are fixed.
(iii) There is full employment in the economy.
(iv) Only two goods can be produced from the given resources.
(v) Resources of production are fully mobile.
(vi) The factors of production are given in quantity and quality
(vii) The low of diminishing returns operates in production.
The explanation and analysis of production possibility curve is based upon certain assumptions, some of them are following
(i) The time period does not change. It remains the same throughout the curve.
(ii) Techniques of production are fixed.
(iii) There is full employment in the economy.
(iv) Only two goods can be produced from the given resources.
(v) Resources of production are fully mobile.
(vi) The factors of production are given in quantity and quality
(vii) The low of diminishing returns operates in production.
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