And this causes the concave shape of PPC. 21. Concavity of PPC implies: a. increasing slope b. decreasing slope c. constant slope d. none of these 6. This movement is being depicted in the below graph with the help of thearrow from point P. The large scale outflow of foreign capital will lead to a decrease in the availability ofresources, thereby shifting the Production Possibility Curve (PPC) from right to left that isfrom AB to CD as shown in the following diagram. Hence, economic value is reflected in terms of increased output and income. To produce one additional unit of capital good, 4 units of consumer good must be sacrificed (point c). The graph of f which is called a parabola will be concave up if a is positive and concave down if a is negative. C.4.2. Central problem of an economy arise, because: Distinction between Microeconomics and Macroeconomics. Solution to Question 1: 1. ... A movement along a PPC implies. Delhi - 110058. The mission of 'Clean India Mission' (Swachh Bharat Mission) will lead tobetter waste-management technique. ; if it produces OXO of X and OYO of Y, then it indicates inefficient utilisation of resources. PPC is concave to the origin because of increasing Marginal opportunity cost. It appears from the PPC that any point within the enclosed area OFA, say, P, indicates that resources are underutilised. These three phases as mentioned above make up the main body of functions of PPC. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. Share Your Word File MCQ Questions for Class 12 Economics with Answers were prepared based on the latest exam pattern. PPC is concave shaped due to increasing MRT i.e. Substitute any number from the interval into the second derivative and evaluate to determine the concavity. Disclaimer Copyright, Share Your Knowledge Therefore, opportunity cost of a factor is also called the transfer earning of the factor or the cost for next best alternative. Hence, we can say that leftward shift ofPPC results in fall in output and resources. It depicts the economic problem, i.e., what is to be produced. Similarly, with the help of a general PPC as shown below in Fig. Multiple choice questions For instance, if one acre of land produces rice worth Rs. Thus, point ‘N’ shows comparatively higher amount of y in contrast to point T. If shows that the country wants to produce more of X, it has to sacrifice the production of Y. Share Your PPT File, What to Produce, How to Produce and For Whom to Produce. to produce every additional unit of a commodity more and more units of another commodity are sacrificed. opportunity cost w. hereas a . The PPC or production possibility curve/ frontier is a presumptive depiction of the different conceivable combinations of two goods that can be produced within the given available resource. The remainder of the proof is a drastic simpli cation of the proof of Theorem 7 of Mehta and Williamson It is also known as production possibility frontier (PPF). As we move down along the PPC, to produce each additional unit of one good, more and more units of other good need to be sacrificed. Erven et al. Because resources were already being fully utilized. C-D in the diagram above.The PPF is thus concave whe viewed from below. Concave down on since is negative. 1. Replace the variable with in … (b) Concave & downward sloping (c) Convex & upward sloping (d) Concave & upward rising. https://www.zigya.com/share/RUNFTjEyMTEwOTU3. Here you will find a series of Free MCQs on Central Problems of an Economy for Class 11th. When an economy is operating on the PPC, it indicates: a. potential output> actual output b. potential output= actual output c.potential output
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