Answer to Question #37320 in Microeconomics for jothi

Question

Giving reasons identify the position in the production possibility space of an economy where its& firms practice inefficient management practices (like many Sri Lanka firms!).& &

Answer 1

Answer on Question #37320 - Economics - Other.
Production Possibility Frontier - PPF is a curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, labor, etc.). The PPF assumes that all inputs are used efficiently.
If firms practice inefficient management practices (like many Sri Lanka firms!), the PPF will shift to the left, as the inefficient management practices make the operation of the economy less efficient.