Find an answer to your question slope of PPC IS?a. Straight-line PPFs show constant opportunity costs. In fact, in reality usually isn’t straight e. Economic Growth e.i. a graph or economic model that shows the maximum combinations of goods and services, any two categories of goods, that can be produced from a fixed amount of resources. Slope of production possibility curve is : (1) a straight line (2) convex to the point of origin (3) concave to the point of origin (4) none of these. straight lineb. .One good can only be produced by diverting resources from other goods, and so by producing less of them. Which of the following statements is true about a downward-sloping demand curve that is a straight line? Economic Growth – creating a sustained rise in aggregate output e.i.1. It shows businesses and national economies the optimal production levels of two distinct capital goods competing for the same resources in production, and the opportunity cost associated with either decision. production possibilities frontier. Here the slope of the production possibility curve remains constant. This is because whatever be the price of Y 1 or Y 2 movement from A towards H and from B towards T will increase the total revenue. A production–possibility frontier (PPF) or production possibility curve (PPC) is a curve which shows various combinations of set of two goods which can be produced with the given resources and technology where the given resources are fully and efficiently utilised per unit time. Free Online MCQ Questions of CBSE Class 11 Microeconomics Chapter 4 – Consumer’s Equilibrium (Indifference Curve Analysis) with Answers. Now, segments AH and BT of the production possibility curves in Fig. this means that the resources are unlimited for one of the goods and are resources are fixed for one good. And here, it looks like it's bowed in to the origin, it's popping in in this direction. This This is because its slope is given by the relative prices of the two goods. The straight downward-sloping line is the production possibility frontier. The production possibility frontier is an economic model and visual representation of the ideal production balance between two commodities given finite resources. The slope shows the reduction required in one commodity in order to increase the output of the second commodity. 3) Explain how a production possibility curve models the concept of opportunity cost. It specifies the alternative outputs that can be achieved with different levels of inputs. It describes all possible quantity combinations of wine and cheese that can be achieved by the U.S. economy. You determine this by measuring the slope, the rise divided by the run. Production Possibility Curve/Frontier PPC(PPF) is a graphical representation of the possible combinations of the production of two goods or services that the economy can produce at any given time. PPF can be a straight line if we assume that MRT is constant, i.e. The slope and the elasticity are the same at all points. The opportunity cost also remains constant (constant returns). The MRT YX is constant or unchanged as we moved downwards the curve from left to right. 25 (b) are segments of irrational production. Thus, the production possibility curve becomes linear or straight line. 4) What is the difference between increasing and constant opportunity cost? The equation for this line is. Since the slope of a concave curve increases as we move downwards along the curve, the MRT also rises as we move downwards along the curve. production possibilities curve. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. Sometimes, the production possibility frontier does not look like a curve—instead, it’s linear, meaning that it’s simply a straight line. The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other. Here, it looks like it's bowed out from the origin, it looks like it's popping out in that direction. The downward slope of the PPC represents the opportunity cost concept. So the first thing I'm going to do is ask you a question. If a production possibility curve is a straight line, it tells us that the opportunity cost of producing one more unit of good X _________. 5) Draw a production possibility curve that would demonstrate increasing opportunity cost and draw a curve that would demonstrate constant opportunity cost. Production Possibility curves can assume different slopes. Free Online MCQ Questions for Class 11 Microeconomics with Answers was Prepared Based on Latest Exam Pattern. This is known as opportunity cost. A movement along the curve represents a transfer of labor resources out of one industry and into another such that all labor remains employed. same amount of a commodity is sacrificed to gain an additional unit of another commodity. The slope remains the same, but elasticity falls as you move down the demand curve. The most important difference between the two graphs, though, is that a budget constraint is a straight line, while a production possibilities curve is typically bowed outwards, i.e. Moreover, as you might have already guessed, the slope of a straight-line production possibilities curve is equal to the opportunity cost—specifically, the opportunity cost for the good measured on the horizontal axis in terms 24 (b) and Fig. So the farmer must move into the segment HT if he has to maximize his profits. [MUSIC] Why is it the case that in my general example of a production possibility frontier, I assume that it is a curve, but in this numerical example, I got a straight line. If production possibility curve is a straight horizontal line it means that the production of one good is fixed whereas the production of the other good is unrestricted. Moving along the production possibilities curve, the slope becomes steeper (that is, the absolute value of the slope increases), reaching a value of -200 (an absolute value of 200) between points J and K. This reflects an increasing opportunity cost of producing storage sheds, resulting in a convex shape for the production possibilities curve. Can PPF be a straight line? The slope of the production possibilities curve is the marginal rate of transformation. Production-possibility frontier. Thus it goes on increasing. b) diseconomies of scale. convex to the point of originc.concave to the point of origind. As far as i know it can be either concave, convex or a straight line. - 13122948 Moving along the production possibilities curve, the slope becomes steeper (that is, the absolute value of the slope increases), reaching a value of -200 (an absolute value of 200) between points J and K. This reflects an increasing opportunity cost of producing storage sheds, resulting in a convex shape for the production possibilities curve. none of these The slope of the straight-line production possibility curve is equal to the opportunity cost d.ii.1. In economics, a production-possibility frontier (PPF), or "transformation curve", or production possibility curve (PPC) is a graph that shows the different rates of production of two goods that can be produced efficiently with limited productive resources.. Not always constant (a straight line) d.ii.1.a. This production possibility table shows the opportunity cost of each production choice. c) economies of scale. Its always drawn as a curve and not a straight line because there a cost involved in making a choice i.e when the quantity of one good produced is higher and the quantity of the other is low. Furthermore, given this straight line you know that every time the x-variable increases by 10 units the y-variable decreases by 5 units. This information is represented on a curve known as Production Possibility Curve as shown below. In contrast, the PPF has a curved shape because of the law of the diminishing returns. It … The input is any combination of the four factors of production: natural resources (including land), labor, capital goods, and entrepreneurship.The manufacturing of most goods requires a mix of all four. Here, our production possibility curve, or our PPC, it looks like a straight line. The first is the fact that the budget constraint is a straight line. But it’s done for simplicity to help you understand the concept that with our shared resources, we can produce multiple combination of both items. Bernie’s PPF on the left tells us his opportunity cost of scrubbing a room in terms of how many rooms he cannot sweep. The production possibility frontier (PPF) is a curve that is used to discover the mix of products that will use available resources most efficiently. If you're seeing this message, it means we're having trouble loading external resources on our website. If the production possibility curve is a straight line, then the slope of the curve is constant. concave towards the origin. a. X = 30 – Y. b. X = 30 – 2Y. Therefore, if marginal opportunity cost remains constant then PPC will be a straight line owing to constant slope. Since the MRT is constant the slope must be constant and thus the production possibilities curve must be straight line. change regardless of the output mix, the production possibilities curve is a straight line. A production possibilities frontier that is a downward- sloping straight line implies a) no economies of scope. A production possibility curve measures the maximum output of two goods using a fixed amount of input. Yes, you’ll see a downward sloping PPC curve in textbooks and resources on the Internet. If the production possibility frontier is straight, it means that the rate of substitution between the two items in question is constant or the same. the line on a production possibilities graph that shows the maximum possible output. 1. The slope remains the same, but elasticity rises as you move down the demand curve. 2. There are two major differences between a budget constraint and a production possibilities frontier. PPC is a model used to demonstrate opportunity cost as it diagrams various combinations of goods or services an economy can produce when all productive resources are employed. Loading external resources on the Internet resources on our website demonstrate constant opportunity?! Following statements is true about a downward-sloping demand curve that would demonstrate increasing opportunity cost of each choice. 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