Question

1.How do you find best point on the production possibilities frontier?

2. How does opportunity cost change as the production of a good increases?

3. What does it mean to be inside the production possibilities frontier? On the frontier? Outside the frontier?

4. Do self-interest choices promote social interest?

5. If the costs are greater than the benefits, would choice would a ration person make?

Answer 1

1) The best point on the Ppf is attained when it lies on the Ppf indicatiindg efficient utilization of resources.

2) If the ppF is concave to the origin, the production of one more unit of a good will increase the opportunity cost of producing the good.

3) A point inside the ppf means that there is under utilization of resources. Point on the ppf indicates Efficient utilization of resources. A point outside the Ppf indicates an unattinable combination.

4) Acting in the self interest may not always maximize social welfare. For instance in the case of environment pollution.