Question

1. Explain, in your own words, why the production possibilities frontier (PPF) is a downward-sloping curve. Also, explain why all points inside of that curve represent inefficient outcomes.
2. Draw a market which you believe would represent the market for a cure to the current Coronavirus. Draw and explain what would happen to this market if an announcement was made that indicated the number of confirmed cases doubled over the weekend.

       3. As an extension of #3, how would the approval of multiple vaccines effect the elasticity of demand overall and for each individual product? Explain your thoughts as to what outcome would be best for all people in our country/world.

Please help me with these three questions

Answer 1

Answer 1:

A Production possibility frontier graphically represents all the possible combinations of two goods that an economy can produce with the help of available scarce (limited) resources. Now the reason behind its downward slope is "Scarcity of resources " which restricts an economy to produce the same quantity of both the goods so an economy has to forgo some units of a commodity to produce more units of the other commodity hence this curve slopes downward from left to right.

When an economy fails to utilize all its available resources efficiently then the production possibility frontier reflects combinations inside it. This can also be made more clear by observing the following diagrams.

Answer 2: The following diagrams explain the effect of the condition as given in the question.

Answer 3: The approval of the vaccine is the need of the hour in fact the entire world is desperately looking forward to it. According to me the elasticity of demand will be zero i.e. perfectly inelastic because people will by it at any cost to save their lives or lives of their loved ones. Now it is absolutely upto the government and the companies which are constantly working on it to come across a solution to this virus in the form of a medicine.

So I think profit motive must be kept aside and humanity must prevail because life of everyone is equal and under threat also .hence it must be made available at an affordable price so that atleast here in this case the gulf between rich and poor could be filled up a bit and that will the best thing for our beloved country and rest of the world.