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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
What is the difference straight ppf and concave ppf?
If the opportunity cost is constant, the PPF is a straight line; when the opp. cost of a good rises when it is produced more, then concave.
Where is opportunity cost on a production possibility frontier?
The opportunity cost would be the slope of the PPF. So the opportunity cost of the good on the x axis is in terms of the good on the y axis. This is why we would say a PPF demonstrates increasing marginal opportunity cost when it is curved outward
Why does the shape of the ppf slope downwards to the right and bulge out?
The slope of the PPF at a given point is the amount of good 'A' that would have to be sacrificed to get an additional unit of good 'B" That is the opportunity cost of getting an extra unit of good 'B' It bulges outwards (it is concave) because of the increasing opportunity cost If the slope is lineaar (straight) the opportunity cost will be constant and no sacrifice will be made. Three results can result from the PPF these are.. 1) Unattainable 2) Attainable and efficient 3) Attainable but inefficient Innefiency refers to when TB (total benefit) mines TC (tolat cost) is not maximised.
Draw a production possibility curve and use it to explain scarcity choice and opportunity cost?
Production Possibility Curve this is an image of a ppf/ ppc
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
What is the difference straight ppf and concave ppf?
If the opportunity cost is constant, the PPF is a straight line; when the opp. cost of a good rises when it is produced more, then concave.
Where is opportunity cost on a production possibility frontier?
The opportunity cost would be the slope of the PPF. So the opportunity cost of the good on the x axis is in terms of the good on the y axis. This is why we would say a PPF demonstrates increasing marginal opportunity cost when it is curved outward
Why does the shape of the ppf slope downwards to the right and bulge out?
The slope of the PPF at a given point is the amount of good 'A' that would have to be sacrificed to get an additional unit of good 'B" That is the opportunity cost of getting an extra unit of good 'B' It bulges outwards (it is concave) because of the increasing opportunity cost If the slope is lineaar (straight) the opportunity cost will be constant and no sacrifice will be made. Three results can result from the PPF these are.. 1) Unattainable 2) Attainable and efficient 3) Attainable but inefficient Innefiency refers to when TB (total benefit) mines TC (tolat cost) is not maximised.
Draw a production possibility curve and use it to explain scarcity choice and opportunity cost?
Production Possibility Curve this is an image of a ppf/ ppc
Why is the ppf concave to the origin?
because it has increasing opportunity costs
What causes ppf to be a straight line?
when the oppotunity cost is a constant the PPF will be a stright line
Why in a production possibilities frontier model a point inside the frontier is attainable?
A PPF is the locus of points such that all the economy's resources are used to its fullest potential. A PPF is concave to the origin because of the increasing opportunity cost to produce an additional unit of x (on the horizontal axes). A point inside the PPF is attainable because (1) there may be no full employment or (2) inspite of full employment they are used to less potential. On the contrary a point outside the PPF is not attainable because the PPF itself is the locus of the maximum attainable output given resources, the PPF may however expand due to increase in resources or their efficiency.
Why does the production possibility frontier shift outwards?
A PPF will shift out if we have improvements/increases in resources and/or technology. You would see an unbiased increase (the slop of the PPF stays the same) when R+T increase in the production of both goods. You would see a biased increase (the PPF pivots around one pt) when R+T increases in the production of only one of the goods.
Consider a constant slope PPF with a vertical intercept 80 guns and horizontal intercept of 120 tons of butter The opportunity cost of increasing butter output for 30 to 31 tons is?
2/3 of a gun (80 guns/120 tons of butter = 2/3 opportunity cost of butter; meaning that is what you willing to pay for an extra ton of butter). In order to find the opportunity cost of guns, you would divide 120/80=1.5)
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 a war in us affect the PPF?
War has two distinct effects on the PPF of a nation. Assuming the homeland of the nation at war were vulnerable to attack the entire PPF would shift inward as factories fell prey to enemy attacks - this was not the case for the US during WWII. WWII did not cause an inward shift of the PPF for the US because the mainland was not subject to attack. Production in the US was subject to the second effect of war on the production of a nation, the productive resources were shifted toward materiel for the war effort. This is not an outward shift of the PPF in any way, it is a movement along the PPF in favor of war machines at the cost of consumer goods. It is this second effect that enables countries to produce more war goods despite shrinking overall productivity than the country did in peace.To reiterate, you must remember to treat the two effects of war on a nation's PPF separately because they are distinct effects. Changes in the overall PPF are a result of acts of war (e.g. bombing factories) whereas movements along the PPF are the result of being in warfare (i.e. a given factory now produces tanks instead of cars
