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Question
What is a production possibility frontier?
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Solution
The production possibility frontier (PPF) refers to a curve that shows various alternative combinations of two goods that can be produced with efficient utilisation of the given resources and technology. It is also called production possibility curve (PPC).
All the points lying on the PPC, that is curve AE, are associated with different quantities of good 1 and good 2 produced, by employing the available resources fully and in an efficient manner. While any point lying under the curve, like F, depicts inefficiency or underutilisation of available resources. Whereas any point lying outside the curve, like Z, depicts over utilisation of the available endowment of resources and technology; making it non-feasible.
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.
Giving reason comment on the shape of production possibilities curve based on the following schedule:
| Good X (units) | Good Y (units) |
| 0 | 8 |
| 1 | 6 |
| 2 | 4 |
| 3 | 2 |
| 4 | 0 |
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 |
Answer the following question.
Explain the meaning of opportunity cost with the help of a production possibility schedule.
Define flow variable.
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 _____________.
Fill up the blank.
A Production Possibility Curve (PPC) would be convex to the origin if the Marginal Rate of Transformation (MRT) is ___________.
Answer the following question.
Why is a Production Possibility Curve concave to the origin? Explain.
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:
Which of the following statement is false?
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:
