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Chapter 2: Q 11 (page 43)

What does a production possibilities frontier

illustrate?

Short Answer

Expert verified

Production possibilities frontier illustrates different combination of two good that can be produced with available technologies and given resources.

Step by step solution

01

; Assumptions

  1. Resources are fully utilized.
  2. The resources are efficiently utilized.
  3. Technique of production remains constant.
  4. The resources are not equally efficient in production of all the products.
02

; Example

Schedule:

CombinationWheat (good 1)
( in lakh tonnes)		cloth (good 2 )
( in 1000 bales)
A1000
B901
C702
D403
E04

03

; Explanation

In the above table and curve we can see if all the resources are put to production of wheat then 100lakh tonnes of wheat is produced with "o" of cloth and in opposite if all resources are used for production of cloth4000 bales is produced with '0' of wheat. Despite this we have B ( 90lakh tonnes, 1000bales),C (70 lakh tonnes, 2000bales), D( 40lakh tonnes, 3000bales) different combination. So conclusion is if production of cloth is to be increased production of wheat has to be decreased.

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Most popular questions from this chapter

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