Therefore, any point inside the production possibility curve indicates under utilization of resources because the economy can produce more with the given resources and any point beyond the production possibility curve cannot be achieved because the economy does not have the required resources to produce such amount of ouput.
Why is are lying on the production possibility curve?
Since the curve shows that combination B, C and D can be achieved with the available resources, they are labelled as technologically efficient combinations. Further, the production possibility curve ‘R’ lying on this curve indicates that the economy is not using its available resources efficiently.
How is the possibilities curve related to opportunity cost?
On the chart, that’s point B. If it wants to produce more oranges, it must produce fewer apples. On the chart, Point C shows that if it produces 45,000 oranges, it can only produce 85,000 apples. By describing this trade-off, the curve demonstrates the concept of opportunity cost.
What does k mean on the production possibilities curve?
Any combination lying outside the production-possibility frontier, such as K, implies that the economy does not possess sufficient resources to produce this combination. It is said to be “technologically infeasible or unobtainable”.
What does it mean if economy is at a point inside of the PPF curve?
What does it mean if an economy is at a point inside of the PPF curve? A production possibility curve (PPC) is also known as a production possibilities frontier (PPF), It is a graphical tool used by economists to illustrate the choices involved with the use of resources. Become a Study.com member to unlock this answer!
What does a point above the curve mean?
A point above the curve indicates the unattainable with the available resources. A point below the curve means that the production is not utilising 100 percent of the business’ resources. Related link: What is Demand? The production of 20,000 watermelons and 1,20,000 pineapples is shown on point B in the graph.
What does the line sloping down on a production curve mean?
In the graph, the line sloping down also depicts the trade-off between producing commodity A and commodity B. When a firm diverts its resources to produce commodity B, the production of commodity A reduces. A point above the curve indicates the unattainable with the available resources.
What does it mean to be inside the production possibilities frontier?
With respect to a graph of a production possibilities curve, what does it mean to be at a point inside the production possibilities frontier? It means underutilization of resources. What does a country’s production possibilities curve depend on? It depends on available resources and technology.
What do the points outside the curve mean?
Points outside the curved line (such as point X) represent a combination of outputs that are impossible for us to produce, taking into account available resources and technical capabilities. Meanwhile, the points inside the curve indicate an inefficient combination of output (point Z).
What does movement along the production possibilities mean?
Any point on the PPC (Points B & C on the graph) represents full and efficient utilization of resources, while any point outside the PPF (Point G) is not reachable given the resources and the level of technology. We can never produce at any point beyond the curve, until there is a technical advancement or availability of new resources (Growth).
