Explain the three situations whereby the production point is located within the PPC, on the PPC and outside the PPC?

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Expert Solution

1 - Point inside PPC - If a certain point lies insde PPC it denotes the inefficient combination of production. When the economic resources are underutilised , or there is inefficient technology or shortage or resouces , the point will lie inside PPC

2 - Point on PPC - The point on PPC curve denotes the efficient combination of the production of goods. This denotes that the resources in the economy are beng fully utilised and economy is working upto potential

3 - Point outtside PPC - This denores the attainable combination . The economy can only reach this point if the quantity of resources increase or there is improvement in technology. It is also called the unattainable combination.

Rahul Sunny answered 2 years ago

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