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Why does the law of diminishing returns require the Production Possibility Frontier to be curved rather than a straight line?
law of diminishing returns implies that as amount of a variable factor say,labor,changes and others remain unchanged in short run,initially the output increases at an increasing rate,then increases at a decreasing rate and finally reaches maximum and falls.
this shows that output is not changing linearly hence production possibility frontier cannot be a straight line.
What else can I help you with?
What are the features of a normal production possibility curve?
Production Possibility curves can assume different slopes. As far as i know it can be either concave, convex or a straight line. The concave curve would be concave and downward sloping.This is explained by the law of diminishing returns and that factors used are not homogeneous.In this case the Marginal Rate of technical substitution would be rising. The curve would be convex in case of rising productivity and decreasing opportunity cost. Finally it would be a straight line when factors are homogeneous. Hope it was helpfull. Akheel.
What are the four things shown on the production possibility curve?
The production possibility curve is a graph that shows the combinations of two goods that a firm or a nation can create. On the X axis is one good, and on the Y axis is another good. The curve itself shows the combination of goods at maximum efficiency. This curve implies that anything above the curve cannot be produced. If production is inside the curve then the firm or individual is being inefficient and not producing to maximum capacity. If the curve is a straight line this implies that there are no diminishing returns, that no matter how much you produce one good the firm or individual will always produce the same number of goods. The slope of a straight production possibility curve is the opportunity costs of those goods; as an individual or firm decreases the time to produce one good it is able to increase the time to produce the other good. This is compared to a bowed curve which implies diminishing returns. Diminishing returns implies that the returns to labor decrease as a firm or individual produces more of a certain good. This is the concept of the low hanging fruit principle, it takes less time to produce initially because the firm or individual picks the lowest hanging fruit first and then as the number of low hanging fruits dissipates it takes more effort and labor to pick the harder to get fruits. A curve can also imply the diversity of skills in a given population. If we assume that the low hanging fruit principle doesn't exist, we cannot assume that all people in a population will be equally good at a certain task. In order to produce more of a given product a firm will first hire the best individuals for the task and then inevitably will have to hire individuals that are worse at the job, reducing the returns for a given person.
If opportunity costs were constant then the production possibilities curve would be what?
A straight line.
Why is ppc concave to origin?
Oh, dude, PPC is concave to the origin because of the law of diminishing returns. As you produce more of one good, you have to give up more and more of the other good, which makes the curve bend inward. It's like when you eat too much pizza and eventually the joy of each additional slice starts to decline.
Why the production possibilities frontier almost has bowed-out shape?
The shape of the PPF has to do with how many units of good A you have to give up to get another unit of good B It is related to how those goods are different in the types and amounts of productive resources between the two goods. The PPF is straight when you have to give up one unit of good A to get another unit of good B.
What are the features of a normal production possibility curve?
Production Possibility curves can assume different slopes. As far as i know it can be either concave, convex or a straight line. The concave curve would be concave and downward sloping.This is explained by the law of diminishing returns and that factors used are not homogeneous.In this case the Marginal Rate of technical substitution would be rising. The curve would be convex in case of rising productivity and decreasing opportunity cost. Finally it would be a straight line when factors are homogeneous. Hope it was helpfull. Akheel.
What was the Production Budget for The Straight Story?
The Production Budget for The Straight Story was $10,000,000.
What was the Production Budget for Straight A's?
The Production Budget for Straight A's was $2,000,000.
What was the Production Budget for Straight out of Brooklyn?
The Production Budget for Straight out of Brooklyn was $450,000.
Difference between a straight line frontier?
A straight line is a linear shape with no curves or angles, while a frontier generally refers to a boundary or border between two regions or domains. In economics or finance, a straight line frontier may represent a simplistic model of efficient investment portfolios, whereas a frontier in geography may denote a physical boundary between countries or areas.
What are the four things shown on the production possibility curve?
The production possibility curve is a graph that shows the combinations of two goods that a firm or a nation can create. On the X axis is one good, and on the Y axis is another good. The curve itself shows the combination of goods at maximum efficiency. This curve implies that anything above the curve cannot be produced. If production is inside the curve then the firm or individual is being inefficient and not producing to maximum capacity. If the curve is a straight line this implies that there are no diminishing returns, that no matter how much you produce one good the firm or individual will always produce the same number of goods. The slope of a straight production possibility curve is the opportunity costs of those goods; as an individual or firm decreases the time to produce one good it is able to increase the time to produce the other good. This is compared to a bowed curve which implies diminishing returns. Diminishing returns implies that the returns to labor decrease as a firm or individual produces more of a certain good. This is the concept of the low hanging fruit principle, it takes less time to produce initially because the firm or individual picks the lowest hanging fruit first and then as the number of low hanging fruits dissipates it takes more effort and labor to pick the harder to get fruits. A curve can also imply the diversity of skills in a given population. If we assume that the low hanging fruit principle doesn't exist, we cannot assume that all people in a population will be equally good at a certain task. In order to produce more of a given product a firm will first hire the best individuals for the task and then inevitably will have to hire individuals that are worse at the job, reducing the returns for a given person.
What is the difference between straight line production possibility curve and a bowed out production possibility curve?
When a prod poss curve is a straight line, usually it is an exception, this means that as you produce more of one thing you constantly give up the same proportion of another thing as the scenario would be that the factors of production are 100% mobile. With a bowed out prod poss curve, usually called normal, the situation would be that as you produce more of product A you give up alot of B but eventually the rate of substitution begins to decline due to lack in factor efficiency and so the curve becomes less elasstic. Hope this answeres your question. all the best,
What is the distinction between straight line balance method and diminishing balance method?
Straight line method is the method in which asset cost is equally distributed over the entire life of asset and hence the amount of depreciation remain same for every month till salvage value. Under diminishing line method depreciation is charged on diminishing balance of asset every year for the life of asset and the amount remain at the end of life of asset is the salvage value.
Which type of depreciation method accelerates depreciation in the early years of an asset's life?
Diminishing value method where you depreciate the asset by a percentage rather than the straight line method where the same amount gets depreciated each year.
Diminishing balance method of deprecation in the financial statements be more conservative or less conservative than the current practice of using the straight-line method?
The diminishing balance method of depreciation is generally considered less conservative than the straight-line method as it results in higher depreciation expenses in the earlier years of an asset's life. This reflects a more aggressive approach in recognizing depreciation compared to the straight-line method, which spreads depreciation evenly over the useful life of the asset.
What is a basic stitch?
Straight stitch -- I think In production straight line system how to calculate standard allow minut in women's shirts
Where is the fuse for check engine light in a 2000 Nissan frontier?
I was told by my mechanic that the bulb is hardwired straight to computer, therefore there is no fuse.
