Why Production possibilities frontier (PPF) drawn as curve and not a stright Line?
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Answers:
Helper beat me to it, but his answer is correct.
PPF is a curve which shows various combinations of 2 commodities that can be produced with available techniques and beside given amount of resources which are fully and efficiently employed.
Its always drawn as a curve and not a straight strip because there a cost involved in making a choice i.e when level of one good produced is high the body of the other is low.
This is known as opportunity cost( cost in expressions of next best alternative forgone)
For Eg,
If a graph is drawn and if X axis indicates "butter" and Y axis indicates "guns". Moving from production of guns to the production of butter , a choice has to be made of the combinations among the 2 stuff to be produced.Every additional unit of butter will cost contained by terms of guns i.e the rate of transformation from guns to butter is increasing i.e the opportunity cost of one more component of x is increasing.
Its simple why the PPF is represented on a curve and not on a line because the ability to show below production( i.e inside the PPF) or outward shift in the PPF because of improvement within technology can be represented on a straight line and it becomes difficult to some extent impossible to represent PPF on a straight line.
You can also refer to: http://en.wikipedia.org/wiki/Production_…
(please refer the above site for further details)
The short answer is that the PPF is drawn bowed-out from the origin in directive to reflect increasing opportunity cost. An explanation of that idea is as follows:
Suppose that the two commodities that the economy produces are food, the quantity of which is measured on the horizontal axis, and clothes, the degree of which is measured on the vertical axis. If the PPF were a straight line, afterwards each additional component of food produced would always require the economy to forgo some constant amount of clothes. For example, if the slope of the straight rank were -1, then respectively additional unit of food would other require the economy to forgo the production of exactly one unit of clothes.
It make sense to think that some resources are much more productive in the production process of food than they are contained by the production of clothes. For example, land that is conducive to growing corn is presumably more productive contained by producing food than it is in producing clothes.
A PPF shows all combinations of the two products that an economy can produce when its resources are allocated to their most productive uses. With this in mind, suppose that the reduction is currently producing the combination of food and clothes represented by the point at the vertical intercept, where no food is produced and all resources are allocated to clothes production. In proclaim to start producing food, we need to shift some resources to the production of food. Specifically, we need to shift the resources that are relatively more productive contained by food productioin than they are in clothes production. As a result, production of the first unit of food entail only a small loss in clothes production (e.g., a partly unit of clothes). In order to verbs producing more food, however, we have to start shifting resources that are relatively more productive in producing clothes than food, however. As a result, subsequent unit of food entail ever larger losses of clothing production.
The concept is that as more of one product is made, it has a higher opportunity cost within relation to the other. If the two products are very similar, the PPF would be a straight line. Source(s): http://www.netmba.com/econ/micro/product…
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Answers:
Helper beat me to it, but his answer is correct.
PPF is a curve which shows various combinations of 2 commodities that can be produced with available techniques and beside given amount of resources which are fully and efficiently employed.
Its always drawn as a curve and not a straight strip because there a cost involved in making a choice i.e when level of one good produced is high the body of the other is low.
This is known as opportunity cost( cost in expressions of next best alternative forgone)
For Eg,
If a graph is drawn and if X axis indicates "butter" and Y axis indicates "guns". Moving from production of guns to the production of butter , a choice has to be made of the combinations among the 2 stuff to be produced.Every additional unit of butter will cost contained by terms of guns i.e the rate of transformation from guns to butter is increasing i.e the opportunity cost of one more component of x is increasing.
Its simple why the PPF is represented on a curve and not on a line because the ability to show below production( i.e inside the PPF) or outward shift in the PPF because of improvement within technology can be represented on a straight line and it becomes difficult to some extent impossible to represent PPF on a straight line.
You can also refer to: http://en.wikipedia.org/wiki/Production_…
(please refer the above site for further details)
The short answer is that the PPF is drawn bowed-out from the origin in directive to reflect increasing opportunity cost. An explanation of that idea is as follows:
Suppose that the two commodities that the economy produces are food, the quantity of which is measured on the horizontal axis, and clothes, the degree of which is measured on the vertical axis. If the PPF were a straight line, afterwards each additional component of food produced would always require the economy to forgo some constant amount of clothes. For example, if the slope of the straight rank were -1, then respectively additional unit of food would other require the economy to forgo the production of exactly one unit of clothes.
It make sense to think that some resources are much more productive in the production process of food than they are contained by the production of clothes. For example, land that is conducive to growing corn is presumably more productive contained by producing food than it is in producing clothes.
A PPF shows all combinations of the two products that an economy can produce when its resources are allocated to their most productive uses. With this in mind, suppose that the reduction is currently producing the combination of food and clothes represented by the point at the vertical intercept, where no food is produced and all resources are allocated to clothes production. In proclaim to start producing food, we need to shift some resources to the production of food. Specifically, we need to shift the resources that are relatively more productive contained by food productioin than they are in clothes production. As a result, production of the first unit of food entail only a small loss in clothes production (e.g., a partly unit of clothes). In order to verbs producing more food, however, we have to start shifting resources that are relatively more productive in producing clothes than food, however. As a result, subsequent unit of food entail ever larger losses of clothing production.
The concept is that as more of one product is made, it has a higher opportunity cost within relation to the other. If the two products are very similar, the PPF would be a straight line. Source(s): http://www.netmba.com/econ/micro/product…
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