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Question
Give the meaning and characteristics of production possibility frontier.
Solution
Meaning: Production possibility frontier (PPF) means the geographical representation of possible combinations of two goods which can be produced with given resources and technology.
Feature: It slopes downwards because if more of one good can be produced only by taking resources away from the production of another good. Hence, there exists the inverse relationship between change in quantity in one commodity and change in another commodity. It shifts from left to right.
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RELATED QUESTIONS
Assuming that no resource is equally efficient in production of all goods, name the curve which shows production potential of the economy. Explain, giving reasons, its properties.
Giving reason comment on the shape of production possibilities curve based on the following schedule:
| Good X (units) | Good Y (units) |
| 0 | 8 |
| 1 | 6 |
| 2 | 4 |
| 3 | 2 |
| 4 | 0 |
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| Good X (units) | Good Y (units) |
| 0 | 4 |
| 1 | 3 |
| 2 | 2 |
| 3 | 1 |
| 4 | 0 |
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Fill up the blank.
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______ are economic units that carry out the production.
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______ shows the functional relationship between output and cost of production.
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