![]() This is shown by points A and B in the diagram given above. If the resources are fully utilised the economy may operate at any point on the PPC according to the amount of each good produced. ![]() The point on the PPC where the economy operates depends on how well the resources are utilised. The PPC shows the maximum available possibilities which an economy can produce. Operation of the Economy on the Production possibility Curve When all these points of different combinations of production of the two goods are joined, they form a Production Possibility Curve. To produce one more unit of Good X, less of Good Y can be produced. This means that more of one good can be produced by sacrificing the other. Similarly for X B amount of Good X, only Y B amount of Good Y can be produced. If X A amount of Good X, it will be possible to produce only Y A amount of Good Y. With the given resources, many combinations of the two goods can be produced in the economy. The production Possibility Curve is given below for such a situation. Let us consider an economy where two goods, good X and good Y are produced is produced. Therefore, when resources are transferred from one product to another, their productivity or efficiency in production decreases.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |