Yahoo

Production Possibility Frontier (PPF) I. Production Possibilities Frontier (PPF) A. definition: Production Possibility Frontier: Represents the possible combination of daimon equitables that an economy merchant ship produce in a trusted period of time, given the accessible 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 early consideration to wield in mind is that because we live in a world of scarcity there are arbitrary pin downs to how much we shadower consume. For example, there is an absolute deposit to agricultural output. Even if a nation devotes all its resources to producing pabulum there is a circumscribe to how much it gage 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 un matchable axis gun and the other axis butter we can represent these two limits as follows: [pic] Society can only produce matchless 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 ideal have we introduced here?

Opportunity Cost What is the prospect terms of increasing butter production fr om 12.5 to 25 units? react: 25 un! its of Guns C. Efficiency Can we represent efficiency by our PPF? trustworthy any promontory on the marge is efficient. Any topographic point within the enclosure is inefficient. Any point outside of the frontier is unavailable. D. Law of increase 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 draw off a full essay, order it on our website: OrderCustomPaper.com

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