the production possibilities curve shows:

What is the opportunity cost of producing more pizza? Expert Answer . Draw the production possibilities curve for Plant R. On a separate graph, draw the production possibilities curve for Plant S. Which plant has a comparative advantage in calculators? The production possibility curve represents graphically alternative produc­tion possibilities open to an economy. d. scarcity can be eliminated. Had the firm based its production choices on comparative advantage, it would have switched Plant 3 to snowboards and then Plant 2, so it would have operated at point C. It would be producing more snowboards and more pairs of skis—and using the same quantities of factors of production it was using at B′. A production possibility curve shows the possibility of an economy in which the full utilization of resources like Land, Labor, capital, and technology can be employed. Selecting one alternative over another one is known as opportunity cost. 1. Understand specialization and its relationship to the production possibilities model and comparative advantage. Production of all other goods and services falls by OA – OB units per period. To find this quantity, we add up the values at the vertical intercepts of each of the production possibilities curves in Figure 2.4 “Production Possibilities at Three Plants”. The law of increasing opportunity cost tells us that, as the economy moves along the production possibilities curve in the direction of more of one good, its opportunity cost will increase. These are: 1. ANS: A PTS: 1 DIF: A PTS This quiz tests your knowledge on various aspects of production possibility frontiers - feedback is provided on your score for each question. By assuming that all goods are used efficiently, the curve has one product, product A, on the x-axis, and another product, product B, on the y-axis. Show transcribed image text. Each transformation curve or production possibility curve serves as the locus of production combinations which can be achieved through allocated quantities of resources. (Many students are helped when told to read this result as “−2 pairs of skis per snowboard.”) We get the same value between points B and C, and between points A and C. Figure 2.2 A Production Possibilities Curve. In this video I explain how the production possibilities curve (PPC) shows scarcity, trade-offs, opportunity cost, and efficiency. But past a certain point, it's going to be pretty high. Production Possibilities. Corn. Put calculators on the vertical axis and radios on the horizontal axis. Suppose a manufacturing firm is equipped to produce radios or calculators. 58. Many countries, for example, chose to move along their respective production possibilities curves to produce more security and national defense and less of all other goods in the wake of 9/11. Its land is devoted largely to nonagricultural use. It suggests that to obtain efficiency in production, factors of production should be allocated on the basis of comparative advantage. Segment 1 of The Production Possibilities Frontier uses the fictional economy of Econ Isle to discuss how limited resources result in a scarcity problem for the economy. a. some of one good must be given up to get more of another good in an economy that is operating efficiently. Figure 2.4 “Production Possibilities at Three Plants” shows production possibilities curves for each of the firm’s three plants. It had enjoyed seven years of dramatic growth and unprecedented prosperity. To put this in terms of the production possibilities curve, Plant 3 has a comparative advantage in snowboard production (the good on the horizontal axis) because its production possibilities curve is the flattest of the three curves. The combined production possibilities curve for the firm’s three plants is shown in Figure 2.5 “The Combined Production Possibilities Curve for Alpine Sports”. In our example, all three plants are equally good at snowboard production. It illustrates the production possibilities model. … Suppose it begins at point D, producing 300 snowboards per month and no skis. Other, Social Studies. In the model, the quantity of the two goods produced are plotted on a graph. are not idle. Suppose further that all three plants are devoted exclusively to ski production; the firm operates at A. An economy achieves a point on its production possibilities curve only if it allocates its factors of production on the basis of comparative advantage. A movement from A to B requires shifting resources out of the production of all other goods and services and into spending on security. The following graph shows the production possibilities curve (PPC) of an economy that produces food and oil. Suppose Plant 1 is producing 100 pairs of skis and 50 snowboards per month at point B. Local and state governments also increased spending in an effort to prevent terrorist attacks. Notice that this curve is linear. Which one will it choose to shift? Expanding snowboard production to 51 snowboards per month from 50 snowboards per month requires a reduction in ski production to 98 pairs of skis per month from 100 pairs. This graph shows potential costs of production when a company or country is efficiently using resources. If you're sitting within the curve, it's inefficiently using its resources. It is the amount of the good on the vertical axis that must be given up in order to free up the resources required to produce one more unit of the good on the horizontal axis. Points A and B Points C and D Points E and F Points X and Y. Production points inside the curve show an economy is not producing at its comparative advantage. Preview this quiz on Quizizz. Play this game to review Economics. We assume that the factors of production and technology available to each of the plants operated by Alpine Sports are unchanged. Panel (a) of Figure 2.6 “Production Possibilities for the Economy” shows the combined curve for the expanded firm, constructed as we did in Figure 2.5 “The Combined Production Possibilities Curve for Alpine Sports”. The graph shows the maximum number of units that a company can produce if it uses all of its resources efficiently. Production implies that the graphics are unrealistic in the beginning of 1929, however things. Allocated quantities of resources shows a point such as a produce at point is... Can get will see in the economy over another one is known as opportunity cost of producing an snowboard! Might have thought that the graphics are unrealistic in the marketplace how the... 1 additional snowboard at plant 1 be the last plant converted to ski production for plants... 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the production possibilities curve shows: 2021