How does the production possibilities frontier illustrate production efficiency?
What will be an ideal response?
The combinations of outputs that lie on the PPF illustrate the concept of production efficiency. These points are the maximum production points possible and are attained only by producing the goods and services at the lowest possible cost. Any point inside the frontier reflects production where one or both outputs may be increased without decreasing the other output level. Clearly, such points cannot be production efficient.
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If you sell your DVD player on eBay, you will be better informed about the quality of the product than any potential buyer. This is called
A) adverse selection. B) asymmetric information. C) moral hazard. D) opportunistic behavior.
The price of good X has a pattern such that P = $3 on Monday through Thursday of every week, and P = $2 on Fridays. If speculators begin participating in the market for good X, their actions will likely lead to a(n) ______________ in the price of good X on Monday through Thursday and a(n) _______________ in the price of good X on Friday
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
The above figure shows a
A. long-run aggregate demand curve. B. short-run aggregate supply curve. C. long-run aggregate supply curve. D. short-run aggregate demand curve.
The value of the best alternative foregone is the opportunity cost of making a decision.
Answer the following statement true (T) or false (F)