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ECON101: Principles of Microeconomics

   

Added on  2020-05-03

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Running head: ECONOMICSEconomicsName of the StudentName of the UniversityAuthor note
ECON101: Principles of Microeconomics_1

ECONOMICS1Table of ContentsAnswer 1..........................................................................................................................................2Answer a......................................................................................................................................2Answer b......................................................................................................................................3Answer c......................................................................................................................................4Answer 2..........................................................................................................................................4Answer a......................................................................................................................................4Answer b......................................................................................................................................5Answer c......................................................................................................................................6References........................................................................................................................................9
ECON101: Principles of Microeconomics_2

ECONOMICS2Answer 1Answer aProduction Possibility Curve Production Possibility curve, also known as production possibility Frontier showsmaximum capacity of output of a nation given technology and resources. PPC is the locus ofdifferent combination of two goods that yield same level of output. With limited resource base,the increase in production of one good involves sacrifice of production of some other good(Mankiw 2014). The shift in resources from one industry to another is subject to an increasingopportunity cost. Every point on the PPC is feasible or attainable production points. Pointsoutside the PPC cannot be attained. Any point on the PPC is efficient point of operation. Aneconomy is said to operating inefficiently at somewhere below the PPC. A shift in the PPCoccurs when there is an increase or decrease in output capacity. The outward shift in PPC reflectsa situation of economic growth while an inward shift in PPC reflects economic contraction. Figure 2: Production Possibility Frontier
ECON101: Principles of Microeconomics_3

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