Advertisements
Advertisements
Question
Giving reason, comment on the shape of Production Possibilities Curve based on the following table :
| Good X (units) | Good Y (units) |
| 0 | 20 |
| 1 | 18 |
| 2 | 14 |
| 3 | 8 |
| 4 | 0 |
Advertisements
Solution
Based on the below schedule, we can say that PPC is concave to origin. This is because as the productionincreases, to produce each additional unit of Good X, more and more units of Good Y are sacrificed. In other words, the opportunity cost of producing one good in terms of another increases.
| Good X (units) |
Good Y
(units)
|
Opportunity Cost |
| 0 | 20 | - |
| 1 | 18 | 2 |
| 2 | 14 | 4 |
| 3 | 8 | 6 |
| 4 | 0 | 8 |
The following figure depicts the shape of PPC.
Thus, the shape of PPC is concave which can be attributed to the law of increasing opportunity cost.
APPEARS IN
RELATED QUESTIONS
Assuming that no resource is equally efficient in production of all goods, name the curve which shows production potential of the economy. Explain, giving reasons, its properties.
Production in an economy is below its potential due to unemployment. Government starts employment generation schemes. Explain its effect using production possibilities curve.
Give the meaning and characteristics of production possibility frontier.
A large number of technical training institutions have been started by the government. State its economic value in the context of production possibilities frontier.
Giving reason, comment on the shape of Production Possibilities Curve based on the following table :
| Good X (units) | Good Y (units) |
| 0 | 4 |
| 1 | 3 |
| 2 | 2 |
| 3 | 1 |
| 4 | 0 |
Answer the following question.
Explain the meaning of opportunity cost with the help of a production possibility schedule.
Define flow variable.
What do you mean by the production possibilities of an economy?
What is a production possibility frontier?
Choose the correct alternative from given options:
In the given figure, the movement on the production possibility curve from point A to point B shows _____________.
______ are economic units that carry out the production.
Production possibility curve slopes downwards from ______ to ______.
Which of the following is the result of increase in price of factors of production?
Which of the following statement is true:
The total output generated by the first four units of variable input is 200 units, 350 units, 450 units and 500 units. The marginal product of the third unit of input is:
