Question

Three situations of production whereby production is located within the ppc, outside the ppc and on the ppc

Answer 1

The graph which depicts the various combinations of output that can be produces using available technology and resources in an economy is known as production possibility curve. It is also known as production possibility frontier.

If the production is located within the curve it is assumed that the resources are not used effectively and efficiently. The output is produced without fully utilizing thee technology and resources available in economy.

If the production is located outside the curve it can be said that the given output cannot be produced with the existing resources in the economy. The economy cannot produce the that output using the excising technology and resources.

If the production is located on the PPC it is assumed that the output is produced by utilizing the resources effectively. It is produced by fully utilizing the capabilities of the nation.