what is production possibility set of the economy
Answers
Answer:
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Explanation:
The set of all non-negative outputs of goods and services that can be produced using the economy's available factor inputs.
Answer:
The set of all non-negative outputs of goods and services that can be produced using the economy's available factor inputs.
Explanation:
what is production:-
(a) What to produce refers to a problem in which decision regarding which goods and services should be produced is to be taken.
(b) Since its resources are limited, every economy has to decide what commodities are to be produced and in what quantities.
(c) ‘The guiding principle for an economy here is to allocate resources in such a way that gives maximum aggregate utility to the society.
How to produce:-
(a) How to produce refers to a problem in which decision regarding which technique of production should be used is made.
(a) How to produce refers to a problem in which decision regarding which technique of production should be used is made.(b) Goods and services can be produced in two ways: by using labour intensive techniques, and by using capital-intensive techniques.
(a) How to produce refers to a problem in which decision regarding which technique of production should be used is made.(b) Goods and services can be produced in two ways: by using labour intensive techniques, and by using capital-intensive techniques.(c) The guiding principle for an economy in such a case has to decide about the techniques of production on the basis of cost of production. Those techniques of production should be used which lead to the least possible cost per unit of commodity or service.
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