Which Of The Following Is An Assumption Used When Drawing A Production Possibilities Frontier?

Production Possibility Frontier (PPF or PPC)

PPFis the curve that shows the all-time (maximum) combinations of two outputs that an economy can produce given three assumptions: i) Engineering is fixed; 2) Resources are fixed; and three) Resources are used at their fullest. Hence, all points in PPF are efficient and a movement between one efficient bespeak to another, ways that more of one product is produced only if less of the other is produced. This creates a trade-off due to scarcity of resources.

All points within PPF are inefficient points. These points are attainable (e.g., betoken U), but they are not using the resources at the fullest. At point U, if technology or resources are used at total capacity, the economy could be at point B or C, meaning more would be produced.

All points exterior PPF are unattainable (due east.thousand., indicate Z). Point Z could be attained merely if technology or/and resources increase and the economy shifts its PPF to the right. Such motility is considered an economic growth .

Police of Increasing Opportunity Toll

Moving from bespeak A to B, B to C, and C to D, shows a merchandise-off betwixt military goods and consumer goods. The only fashion this economy tin can produce more consumer goods is by producing less military goods, or in other words giving up some production of military goods. And then, moving from A to B, the economic system is producing 40 consumer goods and is giving up 20 war machine goods. So, the opportunity price of these first 40 consumer appurtenances is 20 armed services appurtenances.

Moving from B to C, the economy is producing another 40 consumer goods (80 in total) and is giving upward an additional lx military goods. Then, the opportunity toll of the 2d batch of 40 consumer goods is 60 military goods. The opportunity toll of producing consumer goods is increasing equally we produce more of it. This increasing opportunity cost is a like concept of diminishing returns.

Tin you try to explain why increasing opportunity cost occurs?