Questions On Product Possibility Frontier

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Product possibility frontier is a graph that presents the different amount of production of the two goods that an individual, firm or a group of firm can efficiently produce with limited resources. The PPF explains the maximum rate of one product for any given rate of another product or the mixed of all other products, given the amount of the factor of production ready for use. Assume, there are only two commodities produced in the country; smart phones and computers. If 20 smart phones manufactured using the availability resource such as human capital, land and capital and soon, the economy manufactured zero amount of computers. Therefore, 20 Smartphone is the maximum number the economy able to produce or manufactured. On the other side, if the country dedicates to produce, using the availability resource, only 85 computers, then no Smartphone will be produced. Because there is a scarce resource the production of smart phone and computers are limited. Let’s use a graph to explain how it works the Product possibility Curve. (See page 3). If we move from R to W in the graph, we can ...

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