Economics is assumed to be a very difficult subject. As a result of which most of the student finds it very difficult the grasp and comprehend the basic meanings. That is why we have come up with one of the basic yet interesting topics of economics, which is the production possibility curve, its uses, implications, and limitations. Through this blog, we would try to give as much relevant information as possible for your better understanding.This blog focuses on the production possibility curve and analysis help homework.
Here I have tried to incorporate the maximum information about production possibility curve. A production possibility curve (PPC) also known as the production possible frontier is a graphical representation of the combinations of two commodities that the economy can produce using the available factors of productions and the available production technologies. It is used throughout economics.
To understand a production possibility curve one needs to understand two terms opportunity cost and the trade off.Â The production possibility curve is used in the economy to analysis how the production of one commodity affects the production of other.Â One thing that needs to be cleared is that an economy produces millions of products. A production possibility curve explains various economic concepts like scarcity, trade off, and also opportunity costs.
These terms would be explained further in the blog. But we take only two commodities for our simplicity. Hence the PPC shows the maximum level of the output of one commodity, for any production level of other.
Shape of a production possibility curve
To understand production possibility curve and analysis help homework, one needs to understand the different shapes of a production possibility curve. In general, it is bulging upward and outward the origin, but there are other cases also. Let us take the general case where the PPC is concave.
The above diagram we have taken two commodities capital goods and services (plotted on the y-axis) and consumer goods and services (plotted on the x-axis). Points â€œcâ€ and â€œAâ€ are the two different combinations of the two goods.
The hypothetical graph shows how much consumption of consumer goods and services should be given up in order to increase the consumption of capital goods and services (which is the movement from A to C). The point â€œBâ€ which lies outside the PPC indicates impossibility. This point can only be attained if the production possibility curve shifts outward due to some technological advancement or some other reasons.
The shape of the production possibility curve depends on the opportunity cost.
What is an opportunity cost?
Opportunity cost refers to the benefits that a person could have obtained, but he gives it up to obtain the other commodity. In other words,opportunity cost of one commodity in terms of others refers to the amount of that commodity that is sacrificed to obtain the other commodity. The shape of the production possibility curve depends on the opportunity cost. According to the opportunity cost, the shape of the production possibility curve can be of three types
- A common concave shaped production possibility curve due to increasing opportunity cost. An increasing opportunity cost basically means when a large amount of one commodity is sacrificed; it leads to a greater production of the other commodity.
- A straight line production possibility curve due to constant opportunity cost.
- Lastly, a convex production possibility curve due to decreasing opportunity cost.
The two basic determinant of the position of production possibility curve-
The basic two determinant of the position of the production possibility curve is the state of technology and the factors of productions. With a change in these two factors the production possibility curve changes its position that is, it either shrinks (move inward) or grow (move outward)
What is the limitation of the production possibility curve?
The basic aim of the production possibility curve and analysis help homework is to make your base strong so that you can have a better understanding of the subject. Talking about the limitations of the production possibility curve,
- The concept of the production possibility curve is hypothetical. This means that there is no practical method of calculating the production possibility cure. It is simply based on some strict assumptions.
- It defines only the neo classical economics concept.
- The simple assumptions of the production possibility curves are criticized by most of the scholars and economists. It is based on one assumption that human wants are unlimited. But in general humans, wants can be manipulated to some extend as wants and needs mostly depends on the culture, background and earning of the people.
Tips to be followed for production possibility curve and analysis help homework
Like any other homework help project, here are certain tips that I would like to give that would help you to do and understand your topic better.
- The first and foremost tip is to practice the diagrams and sums that regarding this topic. Since this is a topic that needs to be understood and analyzed, hence one should focus on the concept. One can build better concept only through regular practice and study.
- After you have read this blog, my suggestion would be going through other relevant websites on Google.
- One can also take help of the professional tutor for better understanding. They would also help you to solve sums.
- Last, and one of the most important tips that would help you to obtain better grade is not keeping the most difficult topics for the last moment. One should instead try and complete those topics as soon as possible.
Also, there are websites that will help you get the best production possibility curve and analysis help homework.