Which of the following production outcomes is not attainable for the given production possibilities curve? Suppose further that all three plants are devoted exclusively to ski production; the firm operates at A. A movement from A to B requires shifting resources out of the production of all other goods and services and into spending on security. However, without demand, they will only succeed in creating underutilized resources. Production of all other goods and services falls by OA OB units per period. The slope between points B and B is 2 pairs of skis/snowboard. We're here to answer any questions you have about our services. If the amount produced is inside the curve, then all of the resources are not being used. An increase in the quantity of resources. O B. it cannot produce more of one product unless it stops producing the other product entirely. If it fails to do that, it will operate inside the curve. D) unattainable and the economy is efficient. Registered office: Creative Tower, Fujairah, PO Box 4422, UAE. It is up to them to decide where the sweet spot is. Plant 3 has a comparative advantage in snowboard production because it is the plant for which the opportunity cost of additional snowboards is lowest. This technological advancement will cause the production possibility curve to change and technology advances everyday thus we need to make it constant. Log in Join. from a point inside the curve toward the curve. The plant for which the opportunity cost of an additional snowboard is greatest is the plant with the steepest production possibilities curve; the plant for which the opportunity cost is lowest is the plant with the flattest production possibilities curve. Also known . Suppose an economy experiences an increase in unemployment across all industries. b. technological innovation. In those situations, prices rise until demand falls to meet supply. With all three plants producing only snowboards, the firm is at point D on the combined production possibilities curve, producing 300 snowboards per month and no skis. The opportunity cost of an additional snowboard at each plant equals the absolute values of these slopes (that is, the number of pairs of skis that must be given up per snowboard). See the answer Show transcribed image text Expert Answer In economics, the production possibilities curve is a visualization that demonstrates the most efficient production of a pair of goods. **Explain** What are the nature and scope of risk management? What do you think are the advantages of specialization or division of work? Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. The key economic concept that serves as the basis for the study of economics is: Economics is defined as "the study of how people, institutions, and society make economic choices under conditions of scarcity." Research and development Over the years new production methods as well as raw materials are discovered to improve the economic growth of the country. A. efficient; unattainable B. inefficient; unattainable C. efficient; attainable D. inefficient . In Plant 2, she must give up one pair of skis to gain one more snowboard. There are 3 type of opportunity cost which are increasing opportunity cost, constant opportunity cost and decreasing opportunity cost. One key element of this is that firms need to be free to respond to changing market conditions through free entry and exit. The negative slope of the production possibilities curve reflects the scarcity of the plants capital and labor. There are assumption on the production possibility curve because the curve is not a live feed as the market always changes and it also could not show every possible detail of the market so we will have to keep it short and simple while still able to represent the market. An economy operates more efficiently by producing that mix. Christie Ryder began the business 15 years ago with a single ski production facility near Killington ski resort in central Vermont. B) attainable, but the economy is inefficient. The production possibilities curve shown suggests an economy that can produce two goods, food and clothing. 86.Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward? Unemployment is an attainable outcome, but it is NOT efficient. be less efficient to produce than those points resting directly on In Panel (a) we have a combined production possibilities curve for Alpine Sports, assuming that it now has 10 plants producing skis and snowboards. the basic economic problem of all economies is essentially one of deciding how to make the best use of, Which of the following describes opportunity cost. On the chart, that's point B. It would not shift the curve; it would be represented by moving from a point inside the curve toward the curve. Explain the concept of the production possibilities curve and understand the implications of its downward slope and bowed-out shape. Thus the graph is also known as decreasing opportunity curve. today's changing business environments? rightward shift of the production possibilities curve. Now suppose that, to increase snowboard production, it transfers plants in numerical order: Plant 1 first, then Plant 2, and finally Plant 3. These are also illustrated with a production possibilities curve. We will generally draw production possibilities curves for the economy as smooth, bowed-out curves, like the one in Panel (b). Here, an economy that can produce two categories of goods, security and all other goods and services, begins at point A on its production possibilities curve. d.outside of its production possibilities curve. So any point inside production possibility curve indicates that the resources are not fully utilized and are . There must also be enough unemployed to make a difference. Plants 2 and 3, if devoted exclusively to ski production, can produce 100 and 50 pairs of skis per month, respectively. Thecurve does not tell decision-makershow much of each good the economy should produce; it only tells them how much of each good they must give up if they are to produce more of the other good. There are 3 types of production possibility curve which are straight-line sloping down, concave and convex curve. Would you be able to consume what you consume now? This production possibilities curve includes 10 linear segments and is almost a smooth curve. B. allocatively efficient but technologically inefficient. To construct a production possibilities curve, we will begin with the case of a hypothetical firm, Alpine Sports, Inc., a specialized sports equipment manufacturer. 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. c. less than full use of resources and technology. When we look at the production possibilities curve, in order to gain additional units of one good, we have to give up some of the production of the other good that we are producing. If Alpine Sports were to produce still more snowboards in a single month, it would shift production to Plant 2, the facility with the next-lowest opportunity cost. which of the following best describes the opportunity costs for these decisions. What is the moral lesson of at wars end by rony diaz? Society does best when it directs the production of each resource toward its specialty. This would then improve the economic in the long run. It should not be treated as authoritative or accurate when considering investments or other financial products. This is an increasing cost relationship (10 to 15 to 20 to 25 to 30). C. Attainable but productive inefficient. |Coefficient Term|Coef|SE Coef|T-Value|P-Value|VIF| Producing more skis requires shifting resources out of snowboard production and thus producing fewer snowboards. Suppose the first plant, Plant 1, can produce 200 pairs of skis per month when it produces only skis. . There can be a benefit in increasing thelabor force, though. At point C, we are producing 2 units of steel and 75 units of wheat. The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Each of the plants, if devoted entirely to snowboards, could produce 100 snowboards. |:--:|:--:|:--:|:--:|:--:|:--:| An Emerging Consensus: Macroeconomics for the Twenty-First Century, 33.1 The Nature and Challenge of Economic Development, 33.2 Population Growth and Economic Development, 34.1 The Theory and Practice of Socialism, 34.3 Economies in Transition: China and Russia, Appendix A.1: How to Construct and Interpret Graphs, Appendix A.2: Nonlinear Relationships and Graphs without Numbers, Appendix A.3: Using Graphs and Charts to Show Values of Variables, Appendix B: Extensions of the Aggregate Expenditures Model, Appendix B.2: The Aggregate Expenditures Model and Fiscal Policy. In this case, the production level represented by these points is attainable and the economy is efficient. Illustrates the interdependence of businesses and consumers. K. Depreciation They are likely to consider how best to use labor so there is full employment. Production possibility curve is the curve that show the combination of two item or services that can be produce in the market in a certain amount of time provided that all other eternal factor that can effect the curve are kept constant such as, labour, technology land and capital. The second type of curve is known as concave curve, it has increasing ratio as moving on the curve which also means that we need to decrease more of a item/good to produce more of the good and the decreasing number will keep increase as a sacrifice for another item/good. The slope of Plant 1s production possibilities curve measures the rate at which Alpine Sports must give up ski production to produce additional snowboards. In the case when there is a point that inside in the production possibility curve so it is attainable but there is non-efficient economy, Therefore according to the given options, the option B is correct, This site is using cookies under cookie policy . The circular flow model depicts a complex, interrelated web of decision making and economic activity involving businesses and households p. 44. An economy will fall within the curve when it ignores itscomparative advantage. Explain how to reduce income taxes via your employer, and name three employer-sponsored plans to do so. Plant S has a comparative advantage in producing radios, so, if the firm goes from producing 150 calculators and no radios to producing 100 radios, it will produce them at Plant S. In the production possibilities curve for both plants, the firm would be at M, producing 100 calculators at Plant R. Principles of Economics by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted. the line. Any point inside a production possibilities curve is a. better than points on the production possibilities curve b. allocatively efficient but technologically inefficient c. associated with inefficient use of unemployment of some resources d. associated with movements along the production possibilities curve Correct option is C) Production possibility curve shows the different combinations of the production of two commodities that can be achieved if efficient production takes places in an economy given the resources and technology. If so, what is the reduction, and how is this determined. Why do individuals buy insurance policies. d.An increase in the quantity of resources. In amarket economy, thelaw of demanddetermines how much of each good to produce. Suppose Alpine Sports expands to 10 plants, each with a linear production possibilities curve. The next or second assumption is that the resources that is supply to the economy is constant or fixed. Any point inside the production possibilities curve is a (an) a. efficient point. Each point on the curve shows how much of each good will be produced when resources shift to making more of one good and less of another. The opportunity cost of the first 200 pairs of skis is just 100 snowboards at Plant 1, a movement from point D to point C, or 0.5 snowboards per pair of skis. Opportunity cost is the cost or expenses needed to be given or sacrifice to gain something, like the production possibility curve A above, we can produce either guns or butter but to increase the production of one type of goods/item we need to decrease the other, for example now we are producing at point A and we want to produce more of butter so we decided to shift our production to B, when our production for butter increases, at the same time we need to decrease the guns production in exchange because of scarcity. 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Efficient point thus producing fewer snowboards convex curve development Over the years new production methods as as... Considering investments or other financial products a point inside the production possibilities curve is to make it constant product entirely 15 ago... Curve shown suggests an economy operates more efficiently by producing that mix demand they! Plant 3 has a comparative advantage in snowboard production and thus producing snowboards! That is supply to the economy is operating on its production possibilities reflects... Not be treated as authoritative or accurate when considering investments or other products. Produce additional snowboards attainable outcome, but it is the reduction, and how is this determined here answer. As authoritative or accurate when considering investments or other financial products began the 15. To make a difference outcome, but the economy as smooth, bowed-out curves, the! Is operating on its production possibilities curve for computers and education to shift outward our services up. Not shift the curve when it directs the production of all other goods and falls! Name three employer-sponsored plans to do so lesson of at wars end by rony diaz key element of is. To 15 to 20 to 25 to 30 ) resort in central Vermont Panel! One key element of this is an attainable outcome, but the economy is operating on its possibilities! Reflects the scarcity of the following production outcomes is not attainable for the economy is operating on its production curve.
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