Production-Possibility Frontier

Production-possibility frontier In economics, a w are-possibility frontier (PPF) or transformation crimp is a graph that shows the different quantities of two comfortablys that an economy (or agent) could expeditiously produce with limited productive resources. Points along the curve trace the trade-off between the two propers, that is, the hazard m unmatchedtary value. Opportunity cost here measures how much an additional unit of one good costs in units forgone of the other good. The curve illustrates that increasing turnout of one good reduces maximum exertion of the other good as resources are transferred away from the other good. [edit] Productive efficiency, opportunity cost, and allocative efficiency The production possibilities curve shows the maximum feasible (obtainable) amount of one commodity for any given amount of another commodity, as of the societys technology and the amount of factors of production on hand(predicate). The concept is use to show the options open to a firm, individual, household, or economy for a 2-good world. In microeconomics, the 2-good case readily generalizes to the n-good case.

In macroeconomics, it illustrates the production possibilities available to a nation or economy (corresponding roughly to macroeconomic notions of potential widening at a given agitate on the curve) for broad categories of output. All points on a production possibilities curve are points of maximum productive efficiency or minimum productive inefficiency: allocated such that it is impossible to increase the output of one commodity without reducing the output of the other. That is, there moldiness be a sacrifice, an opportunity cost (given by the side of meat of the curve in absolute value), for increasing the production of a good by one unit. Conversely, points inside the frontier are feasible but productively inefficient. Point A in the diagram for example, shows that FA of food and CA of computers can be produced when production is run efficiently. So can FB of food and CB of... If you want to reduce a full essay, order it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper