Draw a production possibilities frontier for the production of food and clothing. On the graph, identify...

Draw a production possibilities frontier for the production of food and clothing. On the graph, identify (by shading and labelling) the area of feasible outcomes and the area of infeasible outcomes. Now find an efficient point “A” and an inefficient point “B”. Explain why “B” is inefficient

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Expert Solution

Production possibility curve shows the combination of two goods which a producer can produce with the given amount of inputs.

In the below figure we have PP' production possibility curve.

Feasible region is the region where a producer can produce. Show the area under PP' is the feasible region. The shaded area LAMN represents the feasible region.

And the area beyond the PPC , ADCJ represent the infeasible region. Because producer can't produce here.

efficient point is the point where producer uses all resources optimally and efficiently , it lies on PPC curve, denoted by A.

A point under the region of PPC curve is called the inefficient point because here producer does not use all resources efficiently.

Rahul Sunny answered 1 year ago

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