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If the opportunity costs of producing a good increases as more of that good is produced the economys production possibility curve will be.?
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Why is the PPF typically bowed outward?
When the PPF graph bows outward it usually means that, as the production of one good continues to grow, the opportunity cost of producing another good increases
When does Country A have a comparative advantage over Country B in the production of televisions?
Country A has a lower opportunity cost for producing televisions.
Why the production possibilities frontier bowed outward.?
The bowed out shape of the production possibility curve is because certain factors of production are better suited to producing one good than they are to producing another good. For example, if the two goods are food and clothes, then in order to produce more and more clothes, eventually the most productive farmland must be allocated to clothes production. As a result, the opportunity cost of producing ever-larger quantities of clothes rises as more clothes are produced. So at first when reallocating the resources to produce more clothes, the unfertailed land will be sacrificed, this land may just produce 40 units of food, so the opportunity cost for producing cloths will be low, but then, as the state will reallocate more resources to produce clothes, the most fertailed land will be sacrificed, which may produce 100 units of food, this will raise the opportunity cost for each unit of cloth being produced.
What is the most common shape of a production possibility curve Explain why this is so?
The most common shape of a Production Possibility Curve (PPC) is a concave bulging in towards the origin (or a quarter circle from one axis to the other.) This is due to the fact that as the production in one goods increase, the opportunity cost of producing the extra of that good (or the amount of Good B that it has to give up) become less.
What is the reason for the law of increasing opportunity costs?
Economic resources are not completely suited to all forms of uses, i.e. the answer lies in the specificity of resources. One resource is often more suited to the production of a certain commodity above others. For example, land is more suitable to the production of apples than the production of shirts. As we increase the shirt production, more and more land is transferred to production of shirts, where it is less suitable. Therefore, opportunity cost of producing shirts increases.
Why a production possibility is concave?
A production possibility curve is concave because of the law of diminishing returns. As more resources are allocated to one good over the other, the opportunity cost increases, which leads to decreasing marginal rates of substitution. This results in a concave curve that shows the trade-off between producing different goods.
Why is the PPF typically bowed outward?
When the PPF graph bows outward it usually means that, as the production of one good continues to grow, the opportunity cost of producing another good increases
When does Country A have a comparative advantage over Country B in the production of televisions?
Country A has a lower opportunity cost for producing televisions.
Why the production possibilities frontier bowed outward.?
The bowed out shape of the production possibility curve is because certain factors of production are better suited to producing one good than they are to producing another good. For example, if the two goods are food and clothes, then in order to produce more and more clothes, eventually the most productive farmland must be allocated to clothes production. As a result, the opportunity cost of producing ever-larger quantities of clothes rises as more clothes are produced. So at first when reallocating the resources to produce more clothes, the unfertailed land will be sacrificed, this land may just produce 40 units of food, so the opportunity cost for producing cloths will be low, but then, as the state will reallocate more resources to produce clothes, the most fertailed land will be sacrificed, which may produce 100 units of food, this will raise the opportunity cost for each unit of cloth being produced.
What is the most common shape of a production possibility curve Explain why this is so?
The most common shape of a Production Possibility Curve (PPC) is a concave bulging in towards the origin (or a quarter circle from one axis to the other.) This is due to the fact that as the production in one goods increase, the opportunity cost of producing the extra of that good (or the amount of Good B that it has to give up) become less.
What is the reason for the law of increasing opportunity costs?
Economic resources are not completely suited to all forms of uses, i.e. the answer lies in the specificity of resources. One resource is often more suited to the production of a certain commodity above others. For example, land is more suitable to the production of apples than the production of shirts. As we increase the shirt production, more and more land is transferred to production of shirts, where it is less suitable. Therefore, opportunity cost of producing shirts increases.
What happens when a society operates on its production possibility curve?
Operating efficiently, it is producing the highest possible amounts of goods that it can produce.
Why does country a have a comparative advantage over country b in the production of televisions?
Country A has a lower opportunity cost for producing televisions
Is the current US economy on the production possibility curve?
An economy can be producing on the PPF curve only in theory. In reality, economies constantly struggle to reach an optimal production capacity.
When will the production possibility frontier be a straight line?
This occurs when two goods are produced without specialization of resources. Typically there is specialization which leads to the bowed out curve. For example, think of a PPF in which corn and wheat are grown on the same land. Some of this land is going to be better for producing wheat; thus, the wheat is going to take up more and more of the land. But at a certain point, you're going to be using land that will be best used for corn production. So if you use all of the land for wheat (a point either on the x or y axis of the PPF), the opportunity cost measured in corn is going to be greater than the cost of producing all wheat. Remember that the slope of the line is the opportunity cost.But when there is no specialization, producing all of one good does not incur a greater opportunity cost. Therefore the opportunity cost is constant and the slope is constant.
How do you illustrate a production possibility frontier?
By using production possibility curve,country is producing both industrial and agricultural product using available resources, technology country operating inside production possibility curve shows the levels underdevelopment, which will be result under utilisation of resources ,poor technology. The country operating outside production possibility curve show the levels of development in economy, however, an economy can produce both industrial and agricultural using the resources available without effecting the production each . A shift from inside to outside it may be result of discovering of new resources, improved technology .
How can production possibilities frontier explain law of increasing opportunity cost?
The shape of the curve is convex to the origin which shows increasing opportunity cost. Consider the changes in reduction of one good's output as production of the other good is increased by the same amount. as the reduction progresses it will become greater due to steeper gradient.
