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Summary Production possibility Curve simple explanation
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This Document summarizes the topic of Production Possibility Curve for all the students with few questions and examples as well.
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Production Possibility CurveEconomics is primarily concerned with managing money and financial assets,
so if you do not understand a question, it does not make sense.
The production possibilities curve (PPC) presents potential prospects for the
production of a pair of products. It is a pillar of the program that pupils have to
practise. This graph is totally important. . . The best part about this graph is the
fact that it shows all the key concepts that you have been learning so far. A
point here outside the curve is impossible because I do not have enough
resources to give there. But the curve can shift. But wait for it. . . That comes
later. Right now, it’s time for you to practice calculating opportunity cost. Let's
do different examples: corn and wheat and cactus and pineapple. A whole of
cactus you give up is called increasing opportunity cost. The law says that as
you produce anything, the opportunity cost to produce it is going to get bigger
and bigger. This is because we're using resources that are less and less suited
towards pineapples. The land and climate produce pineapple and cactus are
completely different.
The production possibilities curve or frontier shows the different combinations of
two goods or services, but it is incorrect to say that it shows the graph of
different combinations of two goods or services. A command economy can
definitely use machines and tools, so C is incorrect. If an individual with the
production possibilities curve above produces 20 shoes and two hats, then that
means that we are underproducing and producing below our production
possibilities. They would then maximize their sale and profit, which is incorrect.
The right answer is guaranteed to be an unattainable combination or a point that
you cannot get to in the future.
In a command economy, the government dictates what resources are allocated
to which companies, resulting in a production possibility curve that is almost
always bowed out. This indicates that resources are not evenly suited and that
there is an increasing opportunity cost for using them. In contrast, in a free
market economy, private ownership of resources allows for individuals to be
self-interested. Firms demand resources from the resource market and produce
products in the product market. There is usually a right answer to this question,
as firms want to produce the most profitable products possible.
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