There are infinite number of possible points of production on a production possibility curve, explain how...
There are infinite number of possible points of production on a production possibility curve, explain how a “market economy” decides to choose one production point on a PPC.
Homework Answers
Ans:
PPC shows different combinations of 2 goods that can be produced using given set of inputs when fully employed.
There exists revenue curve as well.
Suppose price of good X is Px and that of good Y is Py, then total revenue that can be earned is:
PxX + PyY.
Purpose of production is to earn maximum revenue.
Hence, optimal point is where the revenue line is tangent to PPC.
In other words, slope of PPC = slope of line
Or,
MRTS = -Px/Py.
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In this assignment, you will demonstrate your ability to draw a simple production possibilities curve given...
In this assignment, you will demonstrate your ability to draw a simple production possibilities curve given data on the quantity of one input (labor) and the amount of labor required to produce each of two outputs (guns and butter). You should also be able to identify the opportunity cost of one good in terms of the other as the slope of the PPC. You will explain your analysis of the figures to explain why it’s not possible to produce combinations...
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4. Design a production possibility curve. Show and explain how it demonstrates opportunity cost and scarcity. Make this curve reflect the principle of increasing marg inal opportunity costs. In addition to the graph, show the actual numbers you are graphing in a schedule 15 pts 5. Demonstrate on your PPC with a point of operation that the economy is operating below potential. 4 pts
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A) (10 points) Draw the aggregate production possibility curve of fruit production in Washington State. Label carefully. Assume it is linear for each company. B) (5 points) Using one company as an example, explain what the slope of a producer's PPF means. C) (10 points) Suppose apples are $1 per pound and grapes are $5 per pound. Show how many grapes and apples each country will produce (a) graphically and (b) write your answer numerically....
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6. A point that is located inside the production possibility curve is: Efficient b. Unattainable Equally efficient as all other points d. inefficient C
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