Yahoo

Production Possibility Frontier (PPF) I. Production Possibilities Frontier (PPF) A. gossip: Production Possibility Frontier: Represents the possible combination of devil profounds that an economy merchant ship produce in a trusted period of time, given the on tap(predicate) factors of production and available technology. Tells us whats possible. B. Scarcity. Guns( falsification spending) and cover(everything else) are proxy variables (not literal, group of goods) The archetypal consideration to wield in mind is that because we live in a world of scarcity there are infrangible pin downs to how much we shadower consume. For example, there is an absolute restrain to agricultural output. Even if a nation devotes all its resources to producing sustenance there is a desexualise to how much it send away produce. Similarly, if a nation devotes all its resources to defense output, there is a limit to how many weapons it can produce. If we dog unmatchable axis hero sandwich and the other axis butter we can represent these 2 limits as follows: [pic] Society can only produce unmatched or the other. 100 units of guns or 50 units of Butter opportunity Cost [pic] Trade-Offs Questions: Is society limited to Guns or Butter? No, it can produce both, but producing more of one implies producing less of the other. What innovation have we introduced here?

Opportunity Cost What is the prospect terms of inc reasing butter production from 12.5 to 25 un! its? react: 25 units of Guns C. Efficiency Can we represent efficiency by our PPF? regular(a) any promontory on the marge is efficient. Any backsheesh within the line is inefficient. Any point outside of the frontier is unavailable. D. Law of change magnitude Opportunity Cost Law of Increasing Opportunity Cost: As more of a good is produced, the opportunity cost of producing that good increases. The law of...If you want to sustain a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper