Question

The following table depicts the production possibilities of commodities X and Y:
Possibility
A
B
C
D
E

Commodity X
0
1
2
3
4

Commodity Y
10
9
7
4
0

Show these production possibilities through PPF. What do the points on the curve indicate?
Label a point F inside the curve. What does this point indicate?
Label a point G outside the curve. What does this point indicate?
What must occur so that the economy can attain the level of production as indicated by point G?​

Answer 1

Production possibility frontier

Explanation

Possibility           Commodity X                   Commodity Y

 

A                                0                                       10

B                                 1                                       9

C                                 2                                      7

D                                 3                                      4

E                                 4                                      0

For curve go to the image attached.

1. Point on the curve is  named as the proper utilisation of resources.
2. Point inside the curve like point F in the diagram indicates the inefficient resources or resources are not fully uitilised.
3. Point outside the curve like point G in the diagram indicates the resources which are unattainable i.e. they cannot be reached upto the proper utilisation.
4. To attain the level of production which is outside the curve one have to follow the following points:

• Increase the supply of resources.
• Increase in technology.
• Economy can be grown by different possibilities which give more to the economy only.