Answer to Question #126798 in Microeconomics for Mpho

Question

Construct a production possibilities curve for economy zee for milk and bananas :bananas (x-axis) and demonstrate economic growth on the ppc for economy zee

Answer 1

X-axis - Bananas

Y-axis - Milk

The production possibility at point C is achievable ,but it is a productively inefficient point because it is inside the production possibility curve whereas point B is unachievable and point A there is maximum productive efficiency hence shows a trade off between milk and bananas.

Marginal rate of transformation is the rate of change of one commodity to another by foregoing the other commodity to satisfy the other. for example, the amount of milk that is foregone so as to produce bananas is referred to the marginal rate of transformation. hence the curve of production possibility is concave.