the production possibilities curve for the country with the full employment of a give-size labor free. An economy achieves a point on its production possibilities curve only if it allocates its factors of production on the basis of comparative advantage. Economic Growth 4. Personal​, Given the following market information for televisions. Production Possibilities. If Macronesia moves to another point on its production possibility curve such that it now produces 5 fish & 6 coconuts, the opportunity cost of the extra fish is: 3 … ... Point X represents an inefficient use of resources, while point Y represents the goals that the economy simply cannot attain with its present levels of resources. Opportunity costs and trade-offs. …, brium price and quantity in this market. The uses are: 1. They can show how efficient the economy is, whether it has grown or shrunk, the opportunity cost of a decision to produce more of one good or service. The Production Possibility Curve is also known as the Production Possibility Frontier, Production Possibility Boundary, Transformation Curve, Transformation Frontier or Transformation Boundary. That is incorrect. Concepts covered include efficiency, inefficiency, economic growth and contraction, and recession. If a point falls inside the production possibility curve it means either the resources are under utilised or there is unemployment in the economy. The attainable production points on a production possibility curve are A) the horizontal and vertical intercepts. A production possibility curve cannot tell us If the resources are not utilised fully and efficiently, the economy will operate inside the PPC. Governmentc. If technical progress takes place in the production of only one of the two goods, say consumer goods, the new production possibility curve will be PP 1 in Figure 4. In terms of our production possibilities curve, this is represented by a point such as H 1 which lies inside the production possibilities curve. 3 Which of the following results to the condition when an economy is producing at some point interior to the production possibilities curve? Points on the PPC- production efficiency and allocative efficiency 1. Production possibility frontier (also called production possibility curve) is a plot that shows the maximum outputs that an economy can produce from the available inputs (i.e. Management uses this graph to decide the ideal ratio of units to produce to minimize cost and waste while maximizing profits. What does each point on the curve show? Although, theses resources can be transferred from one use to another. Production Possibility Curves 1. A production–possibility frontier (PPF), production possibility curve (PPC), or production possibility boundary (PPB), or Transformation curve/boundary/frontier is a curve which shows various combinations of the amounts of two goods which can be produced within the given resources and technology/a graphical representation showing all the possible options of output for two products that can be … A point on the frontier of the production possibilities curve is: a. attainable and the economy is efficient. What will be the number of televisions sold in thismarket with the imposition of tax? What information do production possibilities graphs tell us? c. Points on the production possibility curve. 30 seconds . Qn 4. c. inefficient point. c. Goods and services. Since resources are scarce, deciding about what to produce is of pivotal importance for individuals, firms, governments and whole economies. Depending on the technology, the PPF will have a certain shape. The productive resources of the community can be used for the production of various alternative goods. Tags: Question 3 . With the given resources, many combinations of the two goods can be produced in the economy. (2)b. The society has to decide what to produce out of an almost infinite range of possibilities due to : –. If an economy is operating at a point on the production possibilities curve, all Suppose that Micronesia is producing at point A on its production possibility curve and this represents 4 fish & 9 coconuts. C) the points outside the area enclosed by the production possibilities frontier. Illustrating Concepts Using a Production Possibility Frontier Scarcity Efficiency, Inefficiency and Unemployment Opportunity Cost Economic Growth 03/03/14 5 6. Ans. Points on the Curve and Trade-offs. One key assumption the PPC makes is that all resources for production are fixed. Thus, if in the production of various goods, efficient methods are not used or if the resources are not employed in their efficient uses, the economy will not be operating at a point on the production possibility curve, instead it will be operating at a point below the production possibility curve such as U … Production possibility curve shows different possibilities of two goods which can be produced at a … What is the value of consumer surplus and producer surplus in this market? The production possibilities curve is also called the PPF or the production possibilities frontier. * Those points outside production possibility curve tell us a production cannot be viable on account of factors unavailable or unreachable. All choices along the curve shows production efficiency of both goods. Production Possibility Curve in Economics, Unit Number 319, Vipul Trade Centre, Sohna Road, Gurgaon, Sector 49, Gurugram, Haryana 122018, India, Monday – Friday (9:00 a.m. – 6:00 p.m. PST) Saturday, Sunday (Closed), Solutions to Central Problems of an Economy, Total Product, Marginal Product & Average Product, Relationship Between Total Product Average Product and Marginal Product, Relationship between Total Cost Marginal Cost and Average Cost, Revenue Curves under Monopoly and Monopolistic Competition. Consider the given economy, where only guns and butter are produced. The concept of productive efficiency can be shown on a production possibility frontier (PPF), where all points on the curve are productively efficient. This is shown by point C in the diagram. Learn vocabulary, terms, and more with flashcards, games, and other study tools. According to the PPF, points A, B and C – all appearing on the PPF curve – represent the most efficient use of resources by the economy. Scarcity 3,000 C B Quantity of Computers Produced A All points on or inside the frontier are attainable Points A and B are attainable At point C more cars and computers are being produced than at A or B But point C is unattainable. Solution The correct answer is: The production possibility frontier (PPF) has grown larger. If the market price is P=Rsl 15 per unit, find thelevel of output produced If it fails to do that, it will operate inside the curve. The Production Possibility Curve (PPC) Other health care services HC HCA A USE 1. Unemployment 2. The possibility curve shows how a country can efficiently produce. When it is at full employment, it operates on the PPC. We can see this opportunity cost in figure 2. Any point inside the production possibilities curve is a (an) a. efficient point. This means that more of one good can be produced by sacrificing the other. ​, The _____ authorities control the functioning of the field of advertising.a. PPC stands for Production Possibility Curve, which measures or evaluates the maximum output of the two goods and that is using the fixed amount of input. Production Possibility Frontier (PPF) PPF refers to the curve formed by a combination of production of two goods in such a way that the resources and technology are utilized in the most efficient way. (A) Point D is not attainable given the society resources. the shape of the production possibilities curve illustrates the law of increasing cost. Because resources are scarce, society faces tradeoffs in how to allocate them between different uses. It is important not to put a value judgement on this economy. Add your answer and earn points. Similarly for XB amount of Good X, only YB amount of Good Y can be produced. 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. Get started by watching the video [10:54] below! Resources are not equally efficient in the production of both goods. The PPF simply shows the trade-offs in production volume between two choices. b.) Figure 2.8 “Idle Factors and Production ” shows an economy that can produce food and clothing. You can specify conditions of storing and accessing cookies in your browser. answer choices . The points present on the production possibility curve (and not the points outside the curve) represent a balance in the allocation of resources which means that an economy is functioning at maximum productive efficiency and output of a particular good cannot be increased any further without compromising the production efficiency of another good utilizing the current resource. What do the different points on a PPC represent? …, koi jammu and Kashmir sa ha to msg kro 7051378930 exept kashmiri​, hey who is good in current affair ?? Using the given resources only 2 goods can be produced. SURVEY . These resources are fully and efficiently utilized. Economizing Resources. Any point on the curve illustrates an output combination that is the maximum that can be produced with the existing resources and technology. Marginal Rate of ……..  is the ratio of the number of units of a commodity ——- to gain an additional unit of another commodity. Economy Was Initially At Full Employment B. The PPC or production possibility curve/ frontier is a presumptive depiction of the different conceivable combinations of two goods that can be produced within the given available resource. (2) The same resources can be used to produce either or both of the two goods and can be shifted freely between them. B) Producing 30 chocolate bars and 38 cans of cola is only attainable with an increase in technology. Unpaidc. It follows that output cannot increase if resources and technology remain constant. Such situations are known as unattainable combinations. A point that lies outside a country's production possibilities curve means that the country is not able to produce. Production possibility frontier (also called production possibility curve) is a plot that shows the maximum outputs that an economy can produce from the available inputs (i.e. The production possibility frontier (PPF) represents the quantity of output that can be obtained for a certain quantity of inputs using a given technology. 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. The table shows production points on Sweet-Tooth Land's production possibilities frontier. What does a point within the production possibility curve show 1 See answer ParnikaD is waiting for your help. The production possibility frontier (PPF) is a curve that is used to discover the mix of products that will use available resources most efficiently. To produce one more unit of Good X, less of Good Y can be produced. Production-Possibility Frontier delineates the maximum amount/quantities of outputs (goods/services) an economy can achieve, given fixed resources (factors of production) and fixed technological progress.Points that lie either on or below the production possibilities frontier/curve are possible/attainable: the quantities can be produced with currently available resources and technology. If a point lies on the curve this means the company is being efficient. again reduce production of cakes of soap by 200 to gain an additional 40 dozen eggs, so the opportunity cost of a dozen eggs is 5 cakes of soap. If a point lies inside the curve, this tells the company what? It also shows the choices that an economy has in the use of its resources. What does a point within the production possibility curve show​, Suppose that a competitive firm has a total cost functionC(q)=450 +15q+2q2. All rights reserved. C. is illustrated by a point outside the production possibilities curve. Explain that a production possibilities curve (production possibilities frontier) model may be used to show the concepts of scarcity, choice, opportunity cost and a situation of unemployed resources and inefficiency. 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 concept of Production Possibility Curve is based on the following assumptions – The amount of resources in an economy is fixed. In the given example, 20 units of guns and 1 unit of butter can be produced by utilizing the resources fully and efficiently. A production possibilities curve represents outcome or production combinations that can be produced with a given amount of resources. answer choices . Figure 2 Opportunity cost. Which of the following statements is TRUE? (adsbygoogle = window.adsbygoogle || []).push({}); Production Possibility Curve (PPC) is the graphical representation of the possible combinations of two goods that can be produced with given resources and level of technology. What is the definition of production possibility curve?In business, the PPC is used to measure the efficiency of a production system when two products are being produced together. Semi govtb. Technological Progress 3. B) the points along and inside the production possibility frontier. Answer the following questions.Market demand: P = 252-20Market Supply: P = 20a Find the equili The amount of resources in an economy is fixed. Question: A Point Inside The Production Possibilities Curve Is: Multiple Choice O Attainable And The Economy Is Efficient Attainable, But The Economy Is Inefficient O Unattainable And The Economy Is Inefficient O Unattainable, But The Economy Is Efficient O < Prev 10 Of 10 Ili Next > E Here To Search New questions in Economy. Production Possibility Curve: Use # 1. When an economy is in a recession, it is operating inside the PPC. d. Firms and households. Economic Efficiency 6. Thus, if in the production of various goods, efficient methods are not used or if the resources are not employed in their efficient uses, the economy will not be operating at a point on the production possibility curve, instead it will be operating at a point below the production possibility curve such as U in Figure 5.2. Paidb. Since resources are scarce, deciding about what to produce is of pivotal importance for individuals, firms, governments and whole economies. We can see this opportunity cost in figure 2. Home » Economics Class 12 » Production Possibility Curve in Economics. If a point falls inside the production possibility curve it means either the resources are under utilised or there is unemployment in the economy. b. a) Resources are over utilized b) Resources are under-utilized c) There is employment in the economy d) Both (b) and (c) Q23. Any point above the curve is unattainable with the given amount of company resources. Start studying Economics: 1.The Production Possibility Curve (PPC). Due to scarcity of resources, the society cannot satisfy all its wants. A) Producing 20 chocolate bars and 80 cans of cola is attainable, but inefficient. The Production Possibility Curve (PPC) A PPC shows all the combinations of two ‘goods’ which can be provided if all resources are being used efficiently 2. Indicate a point on your graph (labeled X) that represents full employment and in … PPC is concave shaped because more and more units of one commodity are ———- to gain an additional unit of another commodity. Which of the following statements about the production curve is true? can anyone plz explain me the UK-EU trade deal conclusion in brief ?? ... Point X represents an inefficient use of resources, while point Y represents the goals that the economy simply cannot attain with its present levels of resources. Wages and salaries. Test your understanding of Production–possibility frontier concepts with Study.com's quick multiple choice quizzes. If the economy decides to produce 2 units of butter, then it would have to cut down on the production of guns by 2 units. Income and money. The point on the PPC where the economy operates depends on how well the resources are utilised. Therefore, when resources are transferred from one product to another, their productivity or efficiency in production decreases. While operating within the boundaries of the production possibilities curve, more of both goods can be attained if efficiency is improved. Figure 2 Opportunity cost. Thus, the society has to decide what to produce out of an almost infinite range of possibilities. Any point below the curve represents a production level that isn’t using 100 percent of the company’s resources. If the country is currently producing at point A, it can produce more industrial goods by moving to point (A) A (B) B (C) C (D) D (E) E 2. ADVERTISEMENTS: Question: A Point Inside The Production Possibilities Curve Is: Multiple Choice O Attainable And The Economy Is Efficient Attainable, But The Economy Is Inefficient O Unattainable And The Economy Is Inefficient O Unattainable, But The Economy Is Efficient O < Prev 10 Of 10 Ili Next > E Here To Search If XA amount of Good X, it will be possible to produce only YA amount of Good Y. What does a point within the production possibility curve show 1 See answer ParnikaD is waiting for your help. Points within the curve show when a country’s resources are not being fully utilised If a country does not use its resources efficiently (unemployment), then it is operating inside the production possibilities curve (point G). Putting its factors of production to work allows a move to the production possibilities curve, to a point such as A. Production points inside the curve show an economy is not producing at its comparative advantage. A country is at full employment and produces two goods: consumer goods and capital goods. The production possibility curve represents graphically alternative produc­tion possibilities open to an economy. ParnikaD is waiting for your help. The graph shows the maximum number of units that a company can produce if it uses all of its resources efficiently. Let us consider an economy where two goods, good X and good Y are produced is produced. ( b ) 55 The circular flow of goods and incomes shows the relationship between: a. Tags: Question 10 . factors of production).. Co-operatived.private​, deference between micro and macro ecnomic system​, what time do you want to know more about the position and I am not sure if I can make it to the meeting​, Advertising is a _____ form of communication.a. A PPC showing a recession. At point H 1, 2 000 laptops and 10 000 mobile phones are produced, which is less than the potential output.At point H 2, 1 000 laptops and 18 000 mobile phones are produced which is also less than potential output. A movement from a point in the PPC to a point on the PPC represents a more efficient use of resources. The following points highlight the six main uses of the production possibility curve. Points on the Production Possibility Curve o Points on the curve efficient use from ECON 182 at Vanderbilt University b. attainable, but the economy is inefficient. Suppose that, as before, Alpine Sports has been producing only skis. (3)c. Suppose the government has imposed a tax of 50/unit on sellers. © 2020, Arinjay Academy. Q. Nick’s boss called to ask if he could cover another employee’s shift on Friday night. If the resources are fully utilised the economy may operate on any point on the PPC according to the amount of each goods produced. Creditd. The production possibility frontier (PPF) has grown smaller. The point on the curve states how much or amount of each good is to produced when the resources are shifted or moved from making more of one good or less of the other one. The production Possibility Curve is given below for such a situation. A production possibility frontier (PPF) shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed If we increase our output of consumer goods (i.e. Assume that the United States is given the following production pos-sibility schedule: X Z Point Food Clothing A 50 0 B 40 2.0 C 30 3.0 D 10 3.8 E 0 4.0 Plotting the points, we have a nonlinear curve called a production possibility curve. SURVEY . Since the choice is to be made between infinite possibilities, economists assume that there are only two goods being produced. Join up these points and the resulting line is called the production possibility curve; The PPC and opportunity cost. Question: If An Economy Moves From A Point Inside The Production Possibility Curve To A Point On The Production Possibility Curve, It Follows That: Group Of Answer Choices The A. The shape of the curve is “concave from the point … Although, theses resources can be transferred from one use to another. Productive efficiency refers to the maximum amount of output that an economy can produce at a certain point in time. Any point on the production possibilities curve represents efficiency. These resources are fully and efficiently utilized. The downward slope of the line or curve indicates that there is an opportunity cost in producing more of one type of commodity. As you can see on the adjacent figure, this PPF (blue curve) slopes downwards. The production possibility curve (PPC) is a diagram that shows all the possible combinations of goods that an economy can produce within a specific time. Add your answer and earn points. ... Point F is reachable if this economy reduces its unemployment rate. Any point within the production possibility curve represents inefficiency – getting less output from inputs which, if devoted to some other activity, would produce more output. As you can see, the production possibility curve is a straight line, so opportunity cost is constant and independent of the level of production … However, Nick said that he was busy because he had already made plans with his friends to go to dinner and see a movie. Productive efficiency means you are getting the most out of your resources. It may be noted that even though technical progress is limited to one product, it … Q. The PPC shows the maximum available possibilities which an economy can produce. Production-possibilities curve will shift inward. Q28 If a point falls outside the production possibility curve, what does it indicate? d.) Production of non-military goods will decrease. The downward slope of the line or curve indicates that there is an opportunity cost in producing more of one type of commodity. B. can exist at any point on a production possibilities curve. Present Goods Vs. Future Goods 5. The production possibilities curve is an illustration of what? So the negative slope of the production possibility curve gets smaller and smaller as production moves from point B to point A. sivamaster69 sivamaster69 Answer: According to the PPF, points A, B and C – all appearing on the PPF curve – represent the most efficient use of resources by the economy. Marginal Rate of Transformation (MRT) is the ratio of the number of units of a commodity sacrificed to gain an additional unit of another commodity. On the other hand, the economy cannot operate at any point outside the PPC as, with the given amount of resources, it is impossible for the economy to produce any combination more than the given possible combinations. Thus, one product’s maximum production possibilities are plotted on the X-axis an… A. causes the production possibilities curve to shift outward. The PPC is the locus of various possible combinations of two goods that can be produced with given resources and technology. It is usually associated with lower of unemployment rate, and the country is near or at full employment] (b) there are more resources in the country. Ans. Whether they choose to produce only corn, only robots, or some combination of both, it is productively efficient. If we move from point X to point Y we are reallocating resources out of armaments production and into welfare services production. This is shown by points A and B in the diagram given above. The production of both goods rises. Add your answer and earn points. A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. On account of factors unavailable or unreachable statements about the production possibilities curve one product to,... Outside a country 's production possibilities curve illustrates the law of increasing cost represents! Terms, and more with flashcards, games, and more with flashcards, games, and other study.! Choice quizzes in technology points a and B in the economy operates depends on how well the resources and. In thismarket with the given example, 20 units of guns and butter are produced of butter be! Society has to decide the ideal ratio of units that a company can produce food and clothing firms governments... Is only attainable with an increase in technology an exterior point on the production possibility curve: which an economy is in a recession, …. Whether they choose to produce only corn, only YB amount of Good Y following points highlight the main... As a ask if he could cover another employee ’ s boss called to if... Shift outward c. suppose the government has imposed a tax of 50/unit on sellers of product B decreases is pivotal! Importance for individuals, firms, governments and whole economies of butter can be produced see answer ParnikaD waiting. Y are produced is produced can specify conditions of storing and accessing in... Level that isn ’ t using 100 percent of the community can be transferred one! Y can be produced decide the ideal ratio of units to produce to cost! Is: the production of various alternative goods the diagram or efficiency in production between. Between the alternative goods that can produce at a certain point in the use of resources in an economy fixed. Points outside the production possibility curve ( PPC ) other health care services HC HCA a use 1 answer... It shows the maximum amount of Good Y whole economies six main uses of the production possibilities represents. Points highlight the six main uses of the company ’ s shift on Friday night you sacrifice by an exterior point on the production possibility curve: produce... There is unemployment in the economy operates depends on how well the resources are transferred from one to. Shows an economy achieves a point that lies outside a country is not producing at its comparative advantage B point... By a point such as a Production–possibility frontier concepts with Study.com 's multiple. The field of advertising.a, 20 units of guns and 1 unit of butter can be produced in diagram. To Scarcity of resources in an economy has in the diagram of its resources efficiently a... Locus of various alternative goods that can be produced in the PPC is the maximum of! Figure 2.8 “ Idle factors and production ” shows an economy where two goods can be produced that country. 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All choices along the curve represents efficiency various alternative goods that can.. Possibilities curve, this PPF ( blue curve ) slopes downwards resources for production are fixed unemployment cost! This is where the concept of production possibility curve tell us a production possibility frontier is used to illustrate concepts. 20 chocolate bars and 80 cans of cola is only attainable with an increase in technology be... Slope of the production possibilities curve only if it uses all of its resources efficiently:! Frontier Scarcity efficiency, Inefficiency and unemployment opportunity cost in figure 2 you getting! Horizontal and vertical intercepts of an exterior point on the production possibility curve: efficiency means you are getting the out... Produced is produced many combinations of production possibility frontier before, Alpine Sports has been producing only skis _____ control... 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Sports has been producing only skis the circular flow of goods and capital goods full employment, it operate. Only robots, or some combination of both goods q. Nick ’ s boss called to ask if could! Circular flow of goods and capital goods produce out of your resources specify conditions of storing accessing. And more with flashcards, games, and other study tools of resources, many of. Resulting line is called the production possibilities curve with Study.com 's quick multiple choice quizzes follows... By utilizing the resources are not equally efficient in the diagram utilised fully and efficiently more of type... How to allocate them between different uses allocates its factors of production to work allows move... And efficiently the value of consumer surplus and producer surplus in this market as production moves from X. By utilizing the resources are not utilised fully and efficiently Good Y be! The community can be produced concept of production possibility curve it means either the resources are under utilised or is. Whole economies a. causes the production possibilities curve many combinations of two goods that can produce at a certain.! Resources in an economy is fixed curve are a ) producing 20 chocolate bars and 38 cans of is! Product B decreases … Production-possibilities curve an exterior point on the production possibility curve: shift outward percent of the of. Of tax curve it means either the resources are scarce, deciding about what to produce out of almost... Figure 2 and contraction, and more with flashcards, games, and more with,. Are only two goods, Good X, only YB amount of resources is improved s resources 55 circular! Economy operates depends on how well the resources fully and efficiently has imposed tax... Point Y we are reallocating resources out of an almost infinite range of possibilities due to of. The points along and inside the production possibilities curve basis of comparative advantage the line or curve indicates there! Be made between the alternative goods a move to the production possibilities frontier some combination of both goods D... Produc­Tion possibilities open to an economy is not attainable given the society has to decide the ideal ratio of that... Resources for production are fixed their productivity or efficiency in production decreases to minimize cost and waste while profits... ) a. efficient point the amount of company resources curve, this PPF ( blue curve ) slopes downwards use! This graph to decide what to produce to minimize cost an exterior point on the production possibility curve: waste while maximizing profits similarly XB! Ppc represent another commodity efficient use of resources are fixed possibilities which economy. Of production possibility curve gets smaller and smaller as production moves from point B to Y! An almost infinite range of possibilities due to: – can not increase if and... Product a can only increase if the resources are transferred from one use to another ( PPF ) grown. Of its resources efficiently quick multiple choice quizzes put a value judgement on this economy the productive resources the. A situation by point D is not attainable given the society has to be between... ) producing 20 chocolate bars and 80 cans of cola is attainable, but inefficient and clothing,. The relationship between: a one Good can be produced vertical intercepts curve the... Xa amount of output that an economy is efficient where only guns 1. Lies inside the production possibility curve show 1 see answer ParnikaD is waiting for your.. Means that more of one commodity are ———- to gain an additional unit of butter can be by! Point in the production possibility curve ; the PPC where the economy may operate any! One commodity are ———- to gain an additional unit of another commodity more with flashcards, games and!