What is central problem of economics ?how ppc solve it?
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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.
Every production possibility curve is based upon these assumptions. If some of these assumptions changes or neglected, then it affects the nature of production possibility curve.
To draw this curve we take the help of production possibilities schedule, as shown below.
Production possibilities schedule
Production possibilitiesQuantity of food production in metric tonsNo of car production (Million)I025II10023III20020IV30015V4008VI5000
This schedule suggests that if all resources are thrown into the production of food, a maximum of 500 metric tones of food can be produced, given the existing technology. If on the other hand, all resources are instead used for producing cars, 25 million cars can be produced. In between these two extreme possibilities exist. If we are wiling to give up some food, we can have some cars.
We can obtain a production possibility curve by drawing production possibilities schedule graphically. The quantity of food is shown on x-axis and the number of cars is shown on y-axis, the different six production possibilities are being shown as point p1 p2 p3 p4 p5 & p6
hope this helps plzz mark this as brainliest.
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.
Every production possibility curve is based upon these assumptions. If some of these assumptions changes or neglected, then it affects the nature of production possibility curve.
To draw this curve we take the help of production possibilities schedule, as shown below.
Production possibilities schedule
Production possibilitiesQuantity of food production in metric tonsNo of car production (Million)I025II10023III20020IV30015V4008VI5000
This schedule suggests that if all resources are thrown into the production of food, a maximum of 500 metric tones of food can be produced, given the existing technology. If on the other hand, all resources are instead used for producing cars, 25 million cars can be produced. In between these two extreme possibilities exist. If we are wiling to give up some food, we can have some cars.
We can obtain a production possibility curve by drawing production possibilities schedule graphically. The quantity of food is shown on x-axis and the number of cars is shown on y-axis, the different six production possibilities are being shown as point p1 p2 p3 p4 p5 & p6
hope this helps plzz mark this as brainliest.
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