The basic economic activities put in order are
Production, consumption and capital formation are called the basic economic activities of an economy. Scarce resources are used in the production of goods and services with the objective of satisfying our needs and wants.
A PPC can shift its position if and only if
The most common reason a PPF would shift is because of a change in technology, or because of economic growth.
Do you agree that the PPC indicates maximum production capacity of an economy
The production possibility curve shows the maximum output combination of two goods and services that an economy can produce with all resources fully employed.
Can a PPC rotate along the X axis also
When there is improve in technology of X commodity it will rotate to right and if there is degradation in technology of X it will rotate left, here we assume that technolgy of Y remains constant.
The shape of an ideal PPC is due to which of the following
Marginal opportunity cost is defined as the amount of one good that needs to be given up in order to increase the production of the other good by one unit. It is calculated as Units of good one sacrificed/ units of the other good obtained.
A PPC can be a straight line due to which of the following
A PPC curve can be a straight line only if the marginal rate of transformation is constant throughout the curve. A MRT can remain constant only if both the commodities are equally constant and marginal utility derived from their production is also constant.
PPC is a mathematical tool for an economy to solve:
Factors such as labor, capital and technology, among others, will affect the resources available, which will dictate where the production possibility frontier lies. The PPF is also known as the production possibility curve or the transformation curve.
The perspective of positive economic analysis to study the economic mechanisms is
Positive economics is the study of economics based on objective analysis. Most economists today focus on positive economic analysis, which uses what is and what has been occurring in an economy as the basis for any statement about the future.
The perspective of normative economic analysis to study the economic mechanisms is
Normative economics is a perspective on economics that reflects normative judgments or opinionated reactions toward economic projects, statements, and scenarios. Unlike positive economics, normative economics heavily concerns itself with value judgments and theoretical scenarios and economic statements that present "what ought to be" rather than facts and cause-and-effect statements.
The Marginal opportunity cost of producing Good X is
Marginal opportunity cost is an economic term that analyzes the effect of producing additional units of a product on the costs of a business, as well as the opportunities the companies give up to produce more of a product.
If an economy was producing 10 billion tonnes of steel and 3 billion tonnes of wheat. What will be the opportunity cost of producing wheat if it was producing 15 tonnes of steel and 2 billion tonnes of wheat?
Opportunity cost refers to a benefit that a person could have received, but gave up, to take another course of action. Stated differently, an opportunity cost represents an alternative given up when a decision is made. This cost is, therefore, most relevant for two mutually exclusive events.
Marginal Rate of Transformation: The rate at which one good must be sacrificed in order to produce a single extra unit (or marginal unit) of ..........
The marginal rate of transformation can be defined as how many units of good x have to stop being produced in order to produce an extra unit of good y, while keeping constant the use of production factors and the technology being used.
If MOC increases, the shape of PPC will be
MOC refers to the number of units of a commodity sacrificed to gain one additional unit of another commodity. In case of PPF, MOC is always increasing, i.e. more and more units of a commodity have to be sacrificed to gain an additional unit of another commodity.PPF is concave shaped because of increasing marginal opportunity costs, i.e. more and more units of one commodity are sacrificed to gain an additional unit of another commodity.
If MOC decreases, the shape of PPC will be
PC can be convex to origin if MOC is decreasing, i.e. less and less unites of a commodity are sacrificed for gain of one additional unit.
If MOC is constant, the shape of PPC will be
The slope of the curve at any point represents the ratio of the marginal opportunity costs of the two commodities. That is, the marginal opportunity cost of an extra unit of one commodity is the necessary reduction in the output of the other.
The problem of growth in an economy means
Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. The "rate of economic growth" refers to the geometric annual rate of growth in GDP between the first and the last year over a period of time.
Improvement in technology shifts PPC to the right because
The most common reason a PPF would shift is because of a change in technology, or because of economic growth. Everything else held constant more goods can be produced after the technological change.
A correct example of growth of resources is
Economic growth is an increase in what an economy can produce if it is using all its scarce resources. An increase in an economy's productive potential can be shown by an outward shift in the economy's production possibility frontier.
If many people die due to an earthquake, it will shift the country’s PPC to the
Severe earthquake in a country leads to decline in both human as well as capital resources. As a result of which less resources are left for producing the goods. Thus decline in resources will lead to a leftward shift in the PPC.
If many people die due to a flood, it will shift the country’s PPC to the
Severe flood leads to a decline in both human as well as capital resources. As a result less resources are left for production, thus result in leftward lift in PPC
If there is a recession, it will shift the country’s PPC to the
During a recession (where all resources are not being utilized), then a movement out to the production possibility curve has no real opportunity cost.
Massive unemployment shifts the PPC to the
The point on the PPC where the economy was producing earlier will shift below the PPC. This is because unemployment implies inefficient use of resources and this inefficient use of resources depicted by shifting the point below PPC.
For a farmer increasing sacrifice of potatoes for each unit of onions will produce _______ shape of his PPC.
Marginal opportunity cost is defined as the amount of one good that needs to be given up in order to increase the production of the other good by one unit. It is calculated as Units of good one sacrificed/ units of the other good obtained. PPC is concave to origin because marginal opportunity cost increase due to law of diminishing returns.
Which of the following is the correct expression of Marginal Rate of Transformation?
The marginal rate of transformation is the rate at which one good must be sacrificed in order to produce a single extra unit (or marginal unit) of another good, assuming that both goods require the same scarce inputs.
A tutor earns Rs. 1000 per hour teaching economics. If he joins a school, he would earn on an average Rs. 300 per hour. What is the opportunity cost of teaching in school?
Opportunity cost is the profit lost when one alternative is selected over another. The concept is useful simply as a reminder to examine all reasonable alternatives before making a decision.