Answer to Question #157221 in Microeconomics for Janani

Question

If the initial situation of resources` distribution between production of sugar and production of pizza is displayed on illustration A, which illustration (A, B, C, D) displays the following case - more factor resources are exploited (perhaps due to an increase in the available workforce or a rise in the amount of capital equipment available for businesses to use) in national economy - the best?

Answer 1

Among the many underlying topics in economics is the Opportunity Curve (Opportunity Curve).

Who was the first to use this model to describe the limited production - I don't know, if someone can give an answer in the comments - I will be glad.

The curve of production opportunities (curve English. Production opportunities) is a curve showing the combination of the maximum production of several (goods or services) that can be created in full employment conditions using all types of resources in the economy.

In different countries, they also call the transformation curve (Transformationskurve),

This model is always considered with limitations in mind:

1. In the economy, only two goods are created (maximum visibility of the model, since it makes it possible to depict the CPV on a plane).

2. Unchanged amount of resources.

3. The invariable quality of resources (that is, the invariability of their productivity).

4. Consistent use of technology.

5. Full use of resources (no resources used).

6. Efficient use of the resources of one good without reducing the other).