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because it has increasing opportunity costs
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∙ 11y ago
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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.
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.
Identify 3 different shapes of PPF?
A Production Possibility Frontier (PPF) is a curved bowed out from the origin. It is mostly 2 dimensional and involving 2 goods or services.
Why is ppc concave to origin?
The PPC / PPF is concave to the origin because not all resources are perfectly suited to the production of both goods. This leads to increasing opportunity costs caused by diminishing returns. So as more and more resources are switched from the production of one good to the production of another good, returns diminish. This is the law of diminishing returns. This law is identified by the PPC being concave. As an example, consider production of root beers to mountain bikes. When most workers are making bikes, the few remaining in brewing buisness are the best brewers. If more bikes are to be produced, then the most skilled beer workers have to be shifted to bike manufacturing, thereby affecting the amount to beer significantly. A concave PPF is generally applicable in cases where the production requires specialization and varied raw products (eg. guns and butter as given on wikipedia.) In cases of similar goods, it is generally a straight line, eg. production of cakes and pastries.
Why is PPF negatively sloped?
why PPF in economics is negatively sloped
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.
Why does a production possibilities curve have a bowed-out shape?
The PPF is bowed outwards (concave to the origin) as tradeoffs between the production of any two goods are constant.
Can a ppf be bowed towards the origin?
maybe
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 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 A nation's production possibilities curve is bowed out from the origin?
When there are diminishing marginal returns to factors of production, the PPF is "bowed out" from the origin.
Identify 3 different shapes of PPF?
A Production Possibility Frontier (PPF) is a curved bowed out from the origin. It is mostly 2 dimensional and involving 2 goods or services.
What is the origin of the word concave?
The word concave is derived from the Latin word concavus, from cavus, meaning cave.
Why is ppc concave to origin?
The PPC / PPF is concave to the origin because not all resources are perfectly suited to the production of both goods. This leads to increasing opportunity costs caused by diminishing returns. So as more and more resources are switched from the production of one good to the production of another good, returns diminish. This is the law of diminishing returns. This law is identified by the PPC being concave. As an example, consider production of root beers to mountain bikes. When most workers are making bikes, the few remaining in brewing buisness are the best brewers. If more bikes are to be produced, then the most skilled beer workers have to be shifted to bike manufacturing, thereby affecting the amount to beer significantly. A concave PPF is generally applicable in cases where the production requires specialization and varied raw products (eg. guns and butter as given on wikipedia.) In cases of similar goods, it is generally a straight line, eg. production of cakes and pastries.
Why is PPF negatively sloped?
why PPF in economics is negatively sloped
When was PPF - company - created?
PPF - company - was created in 1991.
Law of increasing opportunity costs reflected in a PPC is concave to the origin?
The Law of Increasing Opportunity Cost that is shown in a Production Possibilities Curve is concave to the origin. This is because it shows the maximum gain of two products used in production.
