1 / 4

Tool: production possibility frontier; 1

 Charles van Marrewijk. Good Y. 6. A. 2. B. 0. 2. 8. Good X. Tool: production possibility frontier; 1. Suppose it is possible for Holland to produce 2 units of good X and 6 units of good Y. If we plot good X horizontally and good Y vertically this is represented by point A.

shiloh
Download Presentation

Tool: production possibility frontier; 1

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1.  Charles van Marrewijk Good Y 6 A 2 B 0 2 8 Good X Tool: production possibility frontier; 1 Suppose it is possible for Holland to produce 2 units of good X and 6 units of good Y If we plot good X horizontally and good Y vertically this is represented by point A Alternatively, suppose that Holland, if it wanted to, could produce 8 units of good X and 2 units of good Y This is represented by point B

  2.  Charles van Marrewijk Good Y B 0 Good X Tool: production possibility frontier; 2 Perhaps, Holland cannot only produce combinations A and B but many other different combinations also Here we have drawn a few We call the line connecting all possible different combinations the production possibility curve (or prod. pos. frontier; ppf) A

  3.  Charles van Marrewijk Note that the production possibility curve only connects Point C (2 X and 2 Y) can be produced by Holland, but it could produce more of Y (at A) or more of X (at B) or more of both goods (the red line between A and B) C Tool: production possibility frontier; 3 Good Y efficient production combinations. A B 0 6 Good X

  4.  Charles van Marrewijk Thus, the production possibility curve represents efficient Good Y output combinations. All possible combinations of final output (including non-optimal combinations) is called the production possibility set 0 Good X Tool: production possibility frontier; 4

More Related