what is ppc? write its features?
Answers
Answer:
Explanation:
The two main characteristics of PPC are: Slopes downwards to the right: PPC slopes downwards from left to right. It is because in a situation of fuller utilisation of the given resources, production of both the goods cannot be increased simultaneously.
The four key assumptions underlying production possibilities analysis are:
(1) resources are used to produce one or both of only two goods,
(2) the quantities of the resources do not change,
(3) technology and production techniques do not change, and
(4) resources are used in a technically efficient way.
Answer:
Production Possibility Curve:
The economic problem of scarcity and choice can be easily and clearly explained with production possibility frontier or curve.
Production possibility curve or production frontier refers graphically to all the possible combinations of maximum amounts of two goods which can be produced with the available productive resources of an economy.
In short, production possibility curve is a curve which shows all possible combinations of two goods that can be produced by making full use of given resources and technology in an economy.
We know that an economy always faces the problem of resource allocation i.e. making a choice of its resources. Again there is a maximum limit to the quantity of goods and services which an economy can produce with full use of its available resources and technology. We also know that an increase in the production of one commodity reduces the production of other commodity. In this way available resources can be used alternatively to produce different combinations of goods and services. This is known as production possibility. The curve that shows these alternatives is called production possibility curve.
Explanation:
Features of Production Possibility Curve:
Production possibility curve has two main features as explained under:
1. It Slopes Downwards to Right:
Production possibility curve slopes downwards to the right shows that economy has to forgo some quantity of one commodity to get more quantity of other commodity. In figure when the economy moves from combination B to C, economy has to give up two million quintals of wheat to get one million metres of additional cloth.
2. Concave to the Origin:
Production possibility curve is concave to the origin. It shows the operation of the law of increasing opportunity cost. In figure when we move from A to B, economy has to forgo one million quintals of wheat. Again when we move from B to C, economy is required to give up two million quintals of wheat to get one additional unit i.e. one million metres of cloth.