Economics

Running head: ECONOMICS
Economics
Name of the student
Name of the university
Author note

1ECONOMICS
Table of Contents
ANSWER 1................................................................................................................................2
Answer a)...............................................................................................................................2
Answer b)...............................................................................................................................3
Answer c)...............................................................................................................................4
ANSWER 2................................................................................................................................5
Answer a)...............................................................................................................................5
Answer b)...............................................................................................................................5
Answer c)...............................................................................................................................6
Answer d)...............................................................................................................................6
Answer f)................................................................................................................................8
ANSWER 3................................................................................................................................9
Answer a)...............................................................................................................................9
Answer b)...............................................................................................................................9
Answer c).............................................................................................................................10
Reference list............................................................................................................................11

2ECONOMICS
ANSWER 1
Answer a)
CARS
(000)
Bicycles
(000)
30 0
28 1
24 2
18 3
10 4
0 5

3ECONOMICS
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
0
1000
2000
3000
4000
5000
6000
PPF
CARS
BICYCLES
Figure 1 Production capacity of Newland
Answer b)
The production possibility frontier is a kind of curve that is used to depict all the
maximum output possibilities of the two commodities. The production possibility frontier
known to assume that all the inputs are used in an efficient way. The factors which will
be affecting the production possibility frontier are labour, capital along with technology.
PPF can also be termed as the transformation curve. The PPF is usually known to indicate
the production possibilities of the commodities in this case the two commodities are the
bicycles and cars. By drawing the diagram it can be said that production of cars can only
be increased when the production of bicycles can be reduced. In this case the PPF is
known to measure the efficiency where two of the commodities can be produced together.
Therefore, it can be said that the production possibility curve will be used in measuring
the efficiency where two of the goods can be produced. The assumptions which can be
taken into account while graphing the production possibility curve the technology are