Answer to Question #168280 in Microeconomics for Chhavi Nagar

Question

Draw a production posssibility frontier (PPF) for an economy between the clean environment and the quantity of industrial output.What determines the shape of the PPF?Explain in detail the trade off that the society faces.

Answer 1

Factors that determine the shape of the PPF

Shifts in the production possibilities curve are caused by items that change the output of an economy including ;

i) Advances in technology.

ii) Changes in resources.

iii)More education or training.

iv) Changes in the labor force.

Trade offs

i) What goods and service to produce - This is a factor to be considered by any person intending to start a business. One should identify the field and type of product to produce so as to have the business successful.

ii) How to produce them - A person should make sure that he/she has the necessary resources to ensure continuous supply of the good.

iii) Who gets the goods and services - A person should identify the target market for the good and service he or she intends to produce so as to make sure that he or she doesn't incur losses due to lack of market.