Production Possibility Graphs: Key Assumptions:

-Production possibility graph, curve, or frontier, or PPG, PPC, PPF.

-Show alternate ways to allocate resources; show us the most that society can produce if it uses every available resource to the best of it's ability.

 • Key assumptions:
Image result for production possibility graph movement inside curve

 -Full employment: (Not that everyone is working) You cant have 100% employment due to manyt factors. It simply means 80 to 90% factory capacity or a 4-5% unemployment rate.

 -Productive efficiency: A situation in which the economy could not produce any more of one good without sacrificing production of another good.

 -Fixed resources: Land, Labor, Capital

 -Fixed technology: Technology stays the same relative to the period used.

 -No International trade: No international trade is happening or is represented by the graph.

 -Two goods produced: Assuming there are only two goods produced and represented on the given graph.

Comments

  1. Justin TFebruary 6, 2018 at 3:36 AM

    The information on this post was great however I suggest that you should explain your visual a little bit more. It feels out of place especially since the size of the picture is quite small as well.

    ReplyDelete

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