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Prioritize products with a production possibilities curve graph. Lay out the comparative production costs and divvy up your available resources with informed expertise. Don’t wonder about what kind of investment you’re making—see it clearly, with a PPC graph maker. Try FigJam for free.
- What does a production possibilities curve represent?A production possibilities curve graphs the relationship between resources and the creation of different products. When you create a PPC graph, you...
- Why is the shape of the production possibilities frontier (PPF) often curved instead of straight?The curved shape of a PPC/PPF graph demonstrates what economists call “the law of increasing opportunity cost.” Consider the example of the stuffed...
- What is the difference between a straight line on a PPC and a curved line on a PPC?A production possibilities frontier is bowed outward into a curve when resource allocations vary in productive efficiency between the two products....
The production possibilities curve (PPC) is a graph that shows all of the different combinations of output that can be produced given current resources and technology. Sometimes called the production possibilities frontier (PPF), the PPC illustrates scarcity and tradeoffs.
- 11 min
- Sal Khan
- Can't trading get you outside the curve?trading is not production so its not taken in this curve account
- Why were the number of berries he got decreasing?Or you can think of it this way: Say there is a limited number of berries to pick within your village's area. As you pick more and more berries, th...
- I don't see why the amount of berries and rabbits couldn't go above the curve, but they could fall b...What you need to consider is that the frontier is assuming that you are working in the most efficient way. You simply cannot work harder, faster or...
- So far the PPF assumes a "two-goods" economy. If we wanted to visualize a "three-goods" economy, wou...This almost certainly begs the question, "What if a car maker such as Ford or GM wanted to decide how much of each car to produce?" They obviously...
- How would unemployment in both industries/axes affect the PPF?Nothing would happen to the PPF with unemployment BUT the economy would be operating at a point inside the PPF. Nothing fundamental about the econo...
- Trying to take this another step. If you knew something about the relative values or weights of the ...Typically speaking, distances on the axis are of the same relative value. In this scenario, assuming the distance between 0 and 5 rabbits along the...
- I don't understand what kind of scenario would give you half of a rabbit, or a quarter of a rabbit. ...What's tricky is that on the one hand he's graphing a single day's work, but on the other hand he alludes to it being an average day's work. (The p...
- What things would take us to the "impossible Point" I know that a new technology( new technique of h...Keep in mind that the PPF has a time component to it, so to reach a point outside the PPF we have to have a change in the future that increases our...
- what are some assumptions made by the ppf?It is simply assuming that if you were operating at maximum efficiency, these are the highest possible production combinations. It is a metric meas...
- Interpreting A PPF
- PPFs, Scarcity, and Tradeoffs
- The Slope of A PPF: Marginal Rate of Transformation
- Why Is The PPF A curve?
- Ppfs in Microeconomics, Macroeconomics, and Business
- Ppfs and Preferences: Productive Efficiency vs. Allocative Efficiency
- Shifts in The Production Possibilities Frontier
A PPF maps the quantity of one good along the x-axis and the quantity of a second good along the y-axis. We’ll call these goods: Good X and Good Y.The point where the PPF intersects the y-axis represents an allocation of resources where all of the available resources are devoted to the production of Good Y. This point represents the maximum a...Conversely, the PPF intersects the x-axis at a point where all available resources are dedicated to producing Good X. This tells you the maximum amount of Good X that can be produced given the reso...Any combination of goods that lies along the PPF represents a productively efficient combination of goods. These combinations are feasible and maximize output. By “productively efficient,” we mean...PPFs help demonstrate two fundamental concepts in economics: scarcity and tradeoffs. Scarcity is the simple fact that there are never enough of the things we need or want. Time is scarce, money is scarce, and inputs in production are scarce. We don’t have an unlimited amount of these things, so decisions need to be made about how to prioritize and ...
The slope of a PPF curve is known as the marginal rate of transformation (MRT). The MRT measures the opportunity cost of producing one additional unit of Good X. It tells you how many units of Good Y you need to give up to produce an extra unit of Good X. Note that we can approximate the MRT by dividing the change in Good Y by the change in Good X....
If you look at enough production possibilities frontiers, you’ll notice that most PPFs are concave, that is, they curve outward from the origin. A concave PPF implies that the MRT (the opportunity cost of producing an additional unit of Good X) is not constant. It gets larger and larger as the production of Good X increases and as the production of...
Production possibility frontiers are used in microeconomics, macroeconomics, and business. In microeconomics, production possibility frontiers are used to model the constraints and trade-offs of individuals, households, and firms. In macroeconomics, PPFs are typically used to illustrate the most efficient levels of output for an entire economy. PPF...
Production possibility frontiers demonstrate what is possible, but they don’t tell us which particular combination of outputs an individual, household, or business will choose. Output decisions depend not just on what is possible, but also on what is preferred. To model which combination of outputs will be chosen, PPFs need to be used in conjunctio...
In a dynamic production possibilities model — a model that considers changes over time — the PPF can shift outwards or inwards. An outward shift of the PPF represents an improvement in technology or growth in the resources needed to produce Goods X and Y. When the PPF shifts outward, the feasible set grows and the number of goods that can be produc...
Mar 27, 2022 · [Figure 1 - A Production Possibilities Curve] The table shows the combinations of pairs of skis and snowboards that Plant 1 is capable of producing each month. These are also illustrated with a production possibilities curve. Notice that this curve is linear.
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Dec 17, 2022 · Production possibilities refer to the different combinations of goods and services that can be produced within the limits of an economy's resources and technology. In essence, the term describes how we, with limited materials, can produce different amounts of different goods.
In microeconomics, a production–possibility frontier (PPF), production possibility curve (PPC), or production possibility boundary (PPB) is a graphical representation showing all the possible options of output for two goods that can be produced using all factors of production, where the given resources are fully and efficiently utilized per ...
Learning Objectives. By the end of this section, you will be able to: Interpret production possibilities frontier graphs. Contrast a budget constraint and a production possibilities frontier. Explain the relationship between a production possibilities frontier and the law of diminishing returns.
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