Economics Production Possibility Curve

Juliet

Juliet

Questions:

1. What fundamental economic principles are illustrated by a production possibility curve?

2. What may enable an economy to consume a combination of goods outside of its current production possibility curve?

3. Define demand and explain the expected relationship between price and demand.

Questions:

4. What fundamental economic principles are illustrated by a production possibility curve?

5. What may enable an economy to consume a combination of goods outside of its current production possibility curve?

6. Define demand and explain the expected relationship between price and demand.

Economics Assignment

Due Date: 2nd June, 2015

Economics Assignment

Due Date: 2nd June, 2015

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7. What fundamental economic principles illustrated by a production possibility curve?

A production possibility curve or PPC is often known as opportunity cost curve or a transformation or a Production Possibility Fortier. The curve is drawn to show the maximum combination of two goods that a country can produce in a given time period with resources fully employed. A PPC is drawn on the assumption that a country has a fixed amount of resources and a constant state of technology. The curve represents where the boundaries lie in between what can and can’t be produced in the economy at a given point in time. The production possibility curve can be defined as a curve showing the combination of two goods a country can produce with its given resources. The fundamental economic principles illustrated by a PPC are scarcity of resources, opportunity cost, productive efficiency, allocative efficiency and economies of scale.

The PPC displays a left to right downward position, bowed outwards, concave in shape where the quantity of good A points north and the quantity of good B points to the...