What is production possibility curve and why its slope is downward?

Question

Answer

It shows us the alternative combination of two goods that can be produced with given resources and given technology.
It is also called Production Possibility Frontier and Production Possibility Boundry,, because it shows us the limit of what is possible to produce with given resources and given technology,,
PPC slopes downwards , because as we increase in the production of one commodity, we must have to decrease in the production of another commodity

Answer

A production possibility curve show the combination of two goods an economy is capable for production. The downward slope of the production possibility curve is an implication of scarcity .

Answer

Presentation of combination of two goods
it is downwards sloping because of rising moc

Answer

Production Possibility Curve:
A production possibility curve (PPC) is a graphical representation that shows the maximum combinations of goods and services that an economy can produce given its resources and technology. It illustrates the trade-offs that an economy faces when allocating resources between the production of two goods.

Why the Slope is Downward:
- Law of Increasing Opportunity Cost: The downward slope of the PPC is a result of the law of increasing opportunity cost. As an economy produces more of one good, it must give up increasing amounts of the other good. This is because resources are not equally efficient in producing both goods.
- Resource Allocation: Resources in an economy are not perfectly adaptable to producing different goods. For example, a factory designed to produce cars cannot easily be converted to produce computers. As a result, the opportunity cost of producing one good over another increases as more resources are allocated to that good.
- Efficiency: The downward slope of the PPC also reflects the idea of efficiency. Points along the curve represent efficient use of resources, while points inside the curve indicate underutilization of resources. Points beyond the curve are unattainable given the current level of resources and technology.
- Scarcity: The downward slope of the PPC also highlights the concept of scarcity. Since resources are limited, an economy must make choices about how to allocate those resources. The PPC shows the limits of what an economy can produce given its scarce resources.
In conclusion, the downward slope of the production possibility curve is a reflection of the trade-offs, opportunity costs, resource allocation, efficiency, and scarcity that an economy faces when producing goods and services.

Similar Commerce Doubts

Unemployment is reduced due to measures taken by the government. State its value in the context of production possibility curve (PPC)?

What is the meaning of production possibility curve and writes its properties?

Union health minister of India has recently launched ‘Mission Indradhanush’ full immunization for all children by 2020. State its impact on Production possibility curve of the economy?

Union health minister of india has recently launched mission indradhanusha:full immunization for all children by 2020.state its impact on production possibility curve of the economy?

Can anyone please clearly explain production possibility curve?

Top Courses for CommerceView all

Chapter Notes for Commerce

Economics Class 12

Economics Class 11

NCERT Books & Solutions for Commerce

Economics for CBSE Class 12 Board Examinations

Top Courses for Commerce

Top Courses for Commerce

Suggested Free Tests

Related Content

Commerce Courses

Other Courses

How To Prepare?

Related Exams

Company