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In: Economics

Since a society faces trade-offs, are there some ways out of the limitations imposed by the...

Since a society faces trade-offs, are there some ways out of the limitations imposed by the scarcity of resources? Use the Production possibility frontier model

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Expert Solution

Society faces trade offs due to limitation of the resources available for an economy. This is shown/highlighted by the concave shape of the indifference curve. However, there are ways through which the economy can produce more of the goods or shift the production possibility curve in the forward direction even if the resource base of the economy remains the same. This can be done by:

a. Improvement in technology: The improvement in technology will also shift the PPC forward. This is because improvement in technology will enable the production of more of the goods with the same level of resources in the economy.

b. Improvement in productivity: Improvement in productivity implies that the same labor force can now produce more of goods per manhour which will also shift the curve in the forward direction.

Thus, there are some of the ways out of the limitations (shown by boundary of PPC or constrained production) imposed by the scarcity of resources.

Rahul Sunny answered 7 months ago
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