How does the production possibilities frontier illustrate scarcity?
What will be an ideal response?
The unattainable combinations of production that lie beyond the PPF illustrate the concept of scarcity. There simply are not enough resources to produce any of these combinations of outputs. Additionally, while moving along the PPF to increase the production of one good requires that the production of another good be reduced, which also illustrates scarcity.
You might also like to view...
Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling
a. True b. False Indicate whether the statement is true or false
A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5 . The firm can sell the unit for $6 . The firm should produce more than 100 units in order to maximize its profits (or minimize its losses)
a. True b. False Indicate whether the statement is true or false
The change in the quantity of aggregate output demanded depends on how much the aggregate expenditure line shifts, not on which spending component causes the shift
Indicate whether the statement is true or false
Costs of production that do not change with the rate of output are:
a) Nonexistent. b) Marginal costs. c) Variable costs. d) Fixed costs.