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प्रश्न
Why is Production Possibilities Curve concave? Explain
उत्तर
The production possibility curve is concave to the point of origin because to produce each additional unit of Good X, more units of Good Y will have to be sacrificed than before. The opportunity cost of producing every additional unit of Good X tends to increase in terms of the loss of production of Good Y.
Let us consider capital goods and consumer goods to represent PPC in the diagram. If 1 unit
of the capital good and 48 units of consumer goods are produced at the initial production point
B, then to produce one additional unit of the capital good, 4 units of consumer goods must be
sacrificed. The opportunity cost of one additional capital good is 4 units of consumer goods
at Point C. Likewise, it moves on to Point D by sacrificing 9 units of consumer goods to produce one more unit of capital good. The opportunity cost increases as the PPC moves
down from Point C to D. Hence, PPC has a concave shape.
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संबंधित प्रश्न
Explain the central problem of "choice of technique".
Giving reason comment on the shape of Production Possibilities curve based on the following schedule :
| Good X (units) | Good Y (units) |
| 0 | 10 |
| 1 | 9 |
| 2 | 7 |
| 3 | 4 |
| 4 | 0 |
What will be the impact of recently launched 'Clean India Mission' (Swachh Bharat Mission) on the Production Possibilities curve of the economy and why?
What will likely be the impact of large-scale outflow of foreign capital on Production Possibilities curve of the economy and why?
Giving reason comment on the production possibilities curve based on the following schedule:
| Good X (units) | Good Y (units) |
| 0 | 20 |
| 1 | 18 |
| 2 | 14 |
| 3 | 8 |
| 4 | 0 |
Giving reason comment on the shape of Production Possibilities curve based on the following schedule :
| Good X (units | Good Y (units) |
| 0 | 30 |
| 1 | 27 |
| 2 | 21 |
| 3 | 12 |
| 4 | 0 |
What is likely to be the impact of "Make in India" appeal to the foreign investors by the Prime Minister of India, on the production possibilities frontier of India? Explain
Giving reason comment on the shape of Production Possibilities curve based on the following schedule:
| Good X (units) | Good Y (units) |
| 0 | 16 |
| 1 | 12 |
| 2 | 8 |
| 3 | 4 |
| 4 | 0 |
What will be the impact of "Education for All campaign" (Sarv Shiksha Abhiyan) on the Production Possibilities Curve of the Indian economy and why?
What will likely be the impact of the large-scale inflow of foreign capital in India on Production Possibilities Curve and why?
Why is a production possibilities curve downward sloping? Explain
In what circumstances may the production possibility frontier shift away from the origin? Explain.
Normal profits for a firm imply that the firm is breaking even. Explain.
