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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.
What does the slope of a ppf represent?
The slope of a production possibilities frontier (PPF) represents the opportunity cost of producing one good over another. Specifically, it indicates how much of one good must be sacrificed to produce an additional unit of another good. A steeper slope suggests a higher opportunity cost, while a flatter slope indicates a lower opportunity cost. Additionally, the slope can change along the curve, reflecting the principle of increasing opportunity costs as resources are reallocated between different goods.
What is the opportunity cost formula?
opportunity cost of x is equal to y over x. The answer then becomes the slope for the graph.
What is the relationship between long run average cost curve and short run average ciost curve?
The relationship between these two curves is that a long run average cost curve consists of several short run average cost curves, each of which refers to a particular scale of operation. both curves are u shaped the short run avg cost curve rising because of labour specialisation and better spreading of fixed costs and it rises due to the law of diniminshing returns. the long run avg cost curve falls because of economies of scale and rises because of dis-economies. the long run avg cost curve must comprise of all the lowest points of each of the short run avg cost curve because no firm will operate at a level of higher costs in the long run than in the short run. the long run avg cost curve must always be equal to or lie below any short run avg cost curve because in the long run all factors of production can be variable.
What does each point on a possibilities curve chart show?
Each point on a possibilities curve chart, also known as a production possibility frontier (PPF), represents a different combination of two goods or services that an economy can produce using its available resources and technology. Points on the curve indicate efficient production levels, where resources are fully utilized. Points inside the curve suggest underutilization of resources, while points outside the curve are unattainable given current resources and technology. The shape of the curve typically illustrates the opportunity cost of reallocating resources between the two goods.
Types of opportunity cost using production possibility curve?
constant, decreasing and increasing
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
A popular model used to illustrate the concept of opportunity cost is?
The Production Possibilities frontier/curve
How can the production possibilities curve illustrate opportunity cost?
It shows weather the item you are talking about is increasing or decreasing.
Explain why a production possibilities curve is concave?
Because when one produces one product, the opportunity cost of the other product increases i.e. the concave represents the increasing opportunity cost with the production of a good.
Does an economy that is inside its production possibilities curve face any trade-offs?
If there are opportunity cost, then yes my friend, they do.
Why does opportunity cost decreases on the Indifference curve?
If our preferences convex, the indifference curve exhibits decreasing marginal rate of substitution. That is, the more you consume of good X, then you are willing to give up less of good Y. Thus, the opportunity cost of exchanging good Y decreases as we get more of good X.
6 If the average total cost curve is falling what is necessarily true of the marginal cost curve If the average total cost curve is rising what is necessarily true of the marginal cost curve?
When average total cost curve is falling it is necessarily above the marginal cost curve. If the average total cost curve is rising, it is necessarily below the marginal cost curve.
What is opportunity cost and opportunity benefit?
Opportunity cost is the cost that an opportunity presents. The opportunity benefit is the benefit of the opportunity that is being presented.
At what point does the marginal cost (MC) curve intersect the average variable cost (AVC) curve?
The marginal cost (MC) curve intersects the average variable cost (AVC) curve at the minimum point of the AVC curve.
What is difference between opportunity cost curve and production possibility curve?
Production possibility curve represent the production of an economy by using the all possible factor of production and Opportunity cost curve show that a person move from one department , industry etc to another for better opportunity or better salary.
What does law of increasing opportunity cost express?
The law of increasing opportunity costs states that as production of a product increases, the cost to produce an additional unit of that product increases as well. This law is responsible for the bowed shape of the production possibilities curve. Because not all of our economy's resources are equally well-suited to the production of a single good, the increasing opportunity cost is present.
