Answer to Question #270642 in Microeconomics for Pranshi

Question

Draw a production possibility frontier (PPF) for an economy between the clean environment and the quantity of industrial output. What determines the shape of the PPF? Using this PPF, explain in detail the trade-off that the Society faces.

Answer 1

The PPF's form is determined by whether expenses are increasing, decreasing, or constant. The points on the PPF represent combinations of output that are both productive and efficient. Without knowing preferences, we can't figure out which spots are allocatively efficient.