Question

In: Economics

What is a production possibility frontier in terms of economics?

What is a production possibility frontier in terms of economics?

Solutions

Expert Solution

The production possibility frontier (PPF) can be illustrated using a mathematical curve that showcases the balance between the production levels of two different products within limited resources. For example, if a food producer can either produce 50 mangoes or 25 oranges with the same amount of resources, the production possibility of the two can be plotted in a graph. And this gives us the production possibility frontier. PPF is calculated under the assumption that the production of product A can increase only when the production of product B is compensated. PPF data is often used by companies to determine the relative costs of producing one product over another. This data is then analysed to effectively make decisions when allocating finite resources and to increase profits.


The production possibility frontier can be illustrated using a mathematical curve.

Related Solutions

Graphically derive and interpret a PRODUCTION POSSIBILITY FRONTIER
Graphically derive and interpret a PRODUCTION POSSIBILITY FRONTIER. NOTE: remember to list and interpret the assumptions upon which the derivation process is based.
ECONOMICS QUESTION ONE [25] “The production possibility frontier measures the efficiency in which two commodities can...
ECONOMICS QUESTION ONE [25] “The production possibility frontier measures the efficiency in which two commodities can be produced together, helping managers and leaders to decide what mix of commodities is most beneficial.” In terms of the above statement, apply the basic economic model of the production possibility frontier, (PPF), to your country or a country of your choice, indicating how it illustrates the fundamental economic problem of scarcity, choice and opportunity cost. Include in your answer a discussion of the...
Economics is about scarcity,chioce and opportunity cost.with aid of a diagrams using a production possibility frontier,explain...
Economics is about scarcity,chioce and opportunity cost.with aid of a diagrams using a production possibility frontier,explain theses and also highlight the importance of this model in understanding economics. use citation of refertences using harvard way of writing.
In the specific factor model: a) Explain the shape of the Production Possibility Frontier. b) What...
In the specific factor model: a) Explain the shape of the Production Possibility Frontier. b) What is the equilibrium condition for labour allocation between sectors? c) Explain at what point on the PPF the county will produce? d) Assume the price of one good is increasing. Explain what happens with labour and wage rate in each sector.
Assessment Question Week 2: Production Possibility Frontier In 2017, Nepal production of rice and machinery in...
Assessment Question Week 2: Production Possibility Frontier In 2017, Nepal production of rice and machinery in 2017 was published by the Nepal Bureau of Statistics as indicated by the table below. Production in Nepal    P   Q   R   S   T   U   V   W   X   Y   Z Rice (1000 tons)   0   10   26   37   45   50   55   59   66   77   80 Machinery (units)   90   89   85   80   75   70   65   60   50   30   0                           ...
(C) Analyze the difference between a straight line and a curved production possibility frontier.
(C) Analyze the difference between a straight line and a curved production possibility frontier.
1.1 With the aid of a full y labelled diagram, draw a Production Possibility Frontier for...
1.1 With the aid of a full y labelled diagram, draw a Production Possibility Frontier for an economy producing maize and fish. Use the diagram to explain the concepts of choice, scarcity and opportunity costs 1.2 With the aid of a separate diagram explain what would happen if the African armyworm destroyed the maize production in the economy of 1.1 ceteris paribus 1.3 With reference to the diagram in 1.1, distinguish between 'efficiency' and' inefficiency'
Using the production possibility frontier graph and explains the following concepts. Unemployed resources Scarcity Production efficiency...
Using the production possibility frontier graph and explains the following concepts. Unemployed resources Scarcity Production efficiency Opportunity cost Economic growth
Using the ideas and language of the production possibility frontier, consider the following: Why does most...
Using the ideas and language of the production possibility frontier, consider the following: Why does most food travel so far from where it is grown? Would an economist agree that “food is supposed to be local”? How and why are the prices different at the Farmers Diner? Why can’t meals there be 100% locally grown? What would it mean if 80% of all of the food everyone ate was local?
Suppose an economy E has a production possibility frontier characterized by the following equation: Y =...
Suppose an economy E has a production possibility frontier characterized by the following equation: Y = - X 2 + 400 a. Draw the PPF b. Calculate 3 opportunity costs between 4 different points on the PPF, is it constant, or does it depend on the levels of output produced? c. Where does the point A = (10, 250) fall? Explain what it means. Where does the point B = (15, 200) fall? Explain what it means. Where should we...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT