Question

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Q1:

1. Explain with the help of suitable examples / graph the following:

    a. ‘Production Possibility Curve’

     b. The concept of ‘Opportunity Cost’

     c. Distinguish between ‘Quantity Demanded’ and ‘Demand Schedule’

Answer : this is my answer i want you to complete my answer (with the help of suitable examples / graph )

1) PPC shows all different possible combination of two goods which an economy can produce by optimal utilisation of given technology and resources. PPC is downward sloping with concave shape. It is downward slope means more of one good can be produced by decreasing the quantity of other.

B) opportunity cost is the next best alternative forgone. E.g. I got 4 jobs offers from company A,B,C and D and their income are 10000,9000,8000,7000 respectively. Then I’ll choose company A. When I work for company A than it means I forgone/left the other option. And best from other option is option B. Thus opportunity cost of working in country A is 9000.

c) Quantity demanded is a particular demand of a commodity at a particular price whereas demand schedule is a tabular representation of the quantity demanded for various price level.

Answer 1

1) The total amount of resources in an economy is fixed. Therefore, if the resources Labor and Capital are required to produce goods X and Y, there are trade-offs in the production decision. Producing more X implies producing less Y as the labor and capital required to produce Y are used up in X. Thus, to produce 1 extra unit of X (X1 to X2), some units if Y needs to be sacrificed. This is depicted in PPF. This is illustrated in the diagram below.

B) The opportunity cost measures the tradeoff between choosing two alternatives. Choosing one alternative implies letting go of the returns or benefits from the other alternative, For example, I have two subjects to study - economics and mathematics and only one hour to study before an exam. Here, since the time is scarce, the opportunity cost of studying economics is the time sacrificed not studying mathematics. Higher the opportunity cost, more difficult is to let that opportunity go.

C) Demand schedule gives the entire price and demand correspondence. We can map the demand schedule to get the demand curve. On the other hand, quantity demanded is just a subset of the demand schedule. It shows one particular point of the demand curve. Suppose. we have the following information -

P 10 8 6 4 3

Q 2 4 5 8 9

Then, plotting these in a graph we will get the demand curve. This is the demand schedule.

At P - 10, the quantity demanded is 10. So, quantity demanded is a part of demand schedule.