Figure 2.3 The Slope of a Production Possibilities Curve. a. better suited for the production of some goods than others. citation tool such as, Authors: Steven A. Greenlaw, David Shapiro, Daniel MacDonald. OpenStax is part of Rice University, which is a 501(c)(3) nonprofit. As it does, the production possibilities frontier for a society will shift outward and society will be able to afford more of all goods. How to determine what a society desires can be a controversial question, and is usually a discussion in political science, sociology, and philosophy classes as well as in economics. Due to the limitation of resources and technology, if the economy wants to produce more units of good 1, it has to reduce the quantity of good 2, which depicts the downwards slope of the PPF. If it fails to do that, it will operate inside the curve. Figure 1. https://openstax.org/books/principles-economics-3e/pages/1-introduction, https://openstax.org/books/principles-economics-3e/pages/2-2-the-production-possibilities-frontier-and-social-choices, Creative Commons Attribution 4.0 International License, 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, Contrast productive efficiency and allocative efficiency. 1.1. It has two plants, Plant R and Plant S, at which it can produce these goods. For example, children are seeing a doctor every day, whether they are sick or not, but not attending school. Suppose it considers moving from point B to point C. . Why? Society can choose any combination of the two goods on or inside the PPF, but it doesnthave enough resources to produce outside the PPF. Points that lie inside (or below) the PPF are a . The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. In drawing production possibilities curves for the economy, we shall generally assume they are smooth and bowed out, as in Panel (b). There are no specific numbers because we do not know the exact amount of resources this imaginary economy has, nor do we know how many resources it takes to produce healthcare and how many resources it takes to produce education. At the end of the day, it may be efficient to work at full capacity along the PPF curve and have excess, but excess can lead to waste and would thus lose rationale.
Does Onlyfans Send Text Messages,
Unity Funeral Home Moss Point, Ms Obituaries,
Shane Goff Daughter Accident,
Articles W