In 100–200 words, describe how the Production Possibilities Frontier illustrates the concept

In 100–200 words, describe how the Production Possibilities Frontier illustrates the concept

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
In 100–200 words, describe how the Production Possibilities Frontier illustrates the concept of scarcity described above. Describe what would happen to the PPF if the supply of tomatoes increased because of good weather, and if the supply of tomatoes decreased because of bad weather. Please note that this is meant as a guide only, you are highly encouraged to paraphrase the document should you intend to use it for submission. One of the basic premises in Economics is that we have unlimited wants but limited resources that can be used to satisfy these wants. Accordingly, we have to make choices in terms of what resources we use and what products we will produce with those resources. In 100–200 words, describe how the Production Possibilities Frontier illustrates the concept of scarcity described above. The production possibilities frontier shows the maximum combination of goods an economy can produced given the current level of resources and assuming a constant level of technology. As such
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: the graph will show that increasing production of one good will lead to the reduction of production another good due to limited amount of resources. This is known as the opportunity costs which will be the amount of the other which we must go to increase a good by one unit. We will make the choice which offers us the lowest amount of opportunity cost. Summarize your findings for part B. Describe what would happen to the PPF if the supply of tomatoes increased because of good weather, and if the supply of tomatoes decreased because of bad weather. The PPF will shift outwards when supply of tomatoes increase because of good weather as such the maximum combination of goods which the economy can produce will increase. When the supply decreases due to bad weather, PPF will shift inwards as such maximum combination of goods which the economy can produce will decrease....
View Full Document

This note was uploaded on 09/20/2010 for the course ANM 8739 taught by Professor Morgan during the Spring '10 term at Alabama A&M University.

Ask a homework question - tutors are online