What is true of the production possibility frontier?
A production possibilities frontier defines the set of choices society faces for the combinations of goods and services it can produce given the resources available. The shape of the PPF is typically curved outward, rather than straight. Choices outside the PPF are unattainable and choices inside the PPF are wasteful.
What does a production possibilities frontier show?
In business analysis, the production possibility frontier (PPF) is a curve illustrating the varying amounts of two products that can be produced when both depend on the same finite resources. The PPF demonstrates that the production of one commodity may increase only if the production of the other commodity decreases
Which statement about a production possibility curve is correct?
1 Which statement about a production possibility curve is correct? A A production possibility curve is an alternative name for an industry supply curve. B A production possibility curve is an economic model of potential output. C A realistic production possibility curve must be drawn as a straight line.
Which of the following is an assumption of production possibility frontier?
ADVERTISEMENTS: The production possibility curve is based on the following Assumptions: (1) Only two goods X (consumer goods) and Y (capital goods) are produced in different proportions in the economy. (2) The same resources can be used to produce either or both of the two goods and can be shifted freely between them.
Which of the following statements about the production possibility frontier is correct?
The correct answer is The economy has to sacrifice some production of one commodity in order to increase the production of another commodity. Production Possibility Frontier is a curve which shows the relation in production of two commodities in an economy with limited resources.
Which is true about the production possibility curve PPC?
Key model. The Production Possibilities Curve (PPC) is a model that captures scarcity and the opportunity costs of choices when faced with the possibility of producing two goods or services. Points on the interior of the PPC are inefficient, points on the PPC are efficient, and points beyond the PPC are unattainable.
What is true when the production possibilities frontier is linear?
If opportunity costs are constant, a straight-line (linear) PPF is produced. This case reflects a situation where resources are not specialised and can be substituted for each other with no added cost.
What is true about the slope of a production possibility frontier?
The slope of the PPF indicates the opportunity cost of producing one good versus the other good, and the opportunity cost can be compared to the opportunity costs of another producer to determine comparative advantage.