Question

Draw a production possibilities frontier curve. Illustrate the set of points that is feasible, the set of points that is efficient, the set of points that is inefficient, and the set of points that is not feasible. If you prefer not to draw then explain.

Answer 1

Since the production possibility can be defined as a line which is summation of different combinations of two different goods which can be produced with the available resources by using it efficiently. If the technology improves or resources increase, then the PPF shifts outwards.

The point inside the PPF and on the PPF are feasible. Hence the feasible point are A, B, C and D.

The set of point which is on the PPF curve are efficient. Hence efficient point are C and D.

The point on inside the PPF are inefficient. Hence inefficient points are A and B.

The Point outside the PPF are not feasible. Hence the point which are not feasible are point E and F.

イ1 1 PPF