What is the production possibility curve?
The production possibilities curve (PPC) is a graph that shows all of the different combinations of output that can be produced given current resources and technology. Sometimes called the production possibilities frontier (PPF), the PPC illustrates scarcity and tradeoffs.
What is PPC curve Class 11?
Production Possibility Curve (PPC) is the graphical representation of the possible combinations of two goods that can be produced with given resources and level of technology.
What are the 4 assumptions of PPC?
Terms in this set (4)
- Number 1. Only two goods can be produced.
- Number 2. Full employment of Resources.
- Number 3. Fixed Resources (ceteris pluribus)
- Number 4. Fixed Technology.
Why is PPF concave?
Since resources are use specific, therefore every time when one more unit of a commodity is produced more units of the other commodity are sacrificed that results in increasing marginal opportunity cost which leads to the concave shape of the production possibility curve.
How do I create a PPF in Excel?
To calculate the production possibility frontier, choose two variables to compare and create a column within the spreadsheet for each variable. After filling the columns with each variable’s values, each row will have values that represent a data set that can be compared to determine production possibility values.
What is PPC and its properties?
PPC is the curve which shows the combinations of two goods and services that can be produced with fuller the utilisation of a given amount of resources in the most efficient way and with a given production technology. Properties of PPCa Concave to the origin : PPC curve is concave to the origin.
What are the 4 assumptions of a production possibilities curve?
The four key assumptions underlying production possibilities analysis are: (1) resources are used to produce one or both of only two goods, (2) the quantities of the resources do not change, (3) technology and production techniques do not change, and (4) resources are used in a technically efficient way.
Why is PPC concave?
Answer: PPC is concave shaped because of increasing marginal rate of transformation. It implies that more and more units of commodity sacrificed to gain an additional unit of another commodity. PPC is convex shaped because of decreasing marginal rate of transformation.
What are the 4 assumptions of the PPC?
What are the factors affecting production possibility curve?
Scarcity,choice and opportunity cost
How to calculate production possibilities?
plot points on a graph and read data from a graph
What does production possibility curve represent?
The production possibility curve represents the maximum number of output combinations that we can produce by maximizing the use of existing resources. That applies both at the micro (company) and macro (economic) level. Economists describe it in a two-dimensional graph, where each axis represents the amount of output of each item.
What does the production possibilities curve tell us?
The resources are given and remain constant.