What does a production possibilities curve represent?
What does a production possibilities curve represent?
The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions.
What does a production possibilities curve represent quizlet?
Terms in this set (16) What does a production possibilities curve represent? A combination of two goods that can be produced using limited resources.
What two things are represented in a production possibilities curve?
The production possibilities curve (PPC) illustrates tradeoffs and opportunity costs when producing two goods.
What is the meaning of efficiency in production?
Production efficiency is an economic term describing a level at which an economy or entity can no longer produce additional amounts of a good without lowering the production level of another product. Production efficiency may also be referred to as productive efficiency.
How does a production possibilities curve show efficiency?
Production possibilities curves show efficiency by having inefficiency below the curve. Efficiency is the curve. Growth is anything above the curve.
What are the properties of production possibility curve?
The two basic property of production possibility curve are: It slopes downward from left to right- Production possibility curve slopes downward because both the variables involve in the equation are inversely related as one increase then other one decreases and vice versa because the resources are constant.
How is efficiency shown on a production possibilities curve?
According to the PPF, points A, B, and C on the PPF curve represent the most efficient use of resources by the economy. For instance, producing five units of wine and five units of cotton (point B) is just as desirable as producing three units of wine and seven units of cotton.
Which point on the production possibilities curve represents a situation in which resources are not being used effectively?
If a country does not use its resources efficiently (unemployment), then it is operating inside the production possibilities curve (point G). Any point on the curve illustrates an output combination that is the maximum that can be produced with the existing resources and technology.
What do you mean by production possibilities of an economy?
Answer: Production possibilities of an economy refer to different combinations of goods and services which an economy can produce from a given amount of resources and a given stock of technology.
What is the production possibilities curve of an economy?
An economy’s factors of production are scarce; they cannot produce an unlimited quantity of goods and services. A production possibilities curve is a graphical representation of the alternative combinations of goods and services an economy can produce. It illustrates the production possibilities model.
What does the bowed out production possibilities curve for alpine sports illustrate?
The bowed-out production possibilities curve for Alpine Sports illustrates the law of increasing opportunity cost. Scarcity implies that a production possibilities curve is downward sloping; the law of increasing opportunity cost implies that it will be bowed out, or concave, in shape.
Which plant has a comparative advantage in snowboard production?
To put this in terms of the production possibilities curve, Plant 3 has a comparative advantage in snowboard production (the good on the horizontal axis) because its production possibilities curve is the flattest of the three curves. The curve shown combines the production possibilities curves for each plant.
What does the absolute value of the slope of a curve mean?
The absolute value of the slope of a production possibilities curve measures the opportunity cost of an additional unit of the good on the horizontal axis measured in terms of the quantity of the good on the vertical axis that must be forgone.
