See solution. Explain how specialization and trade expand production possibilities. In other words, you face a trade-off: any time you spend harvesting pineapples is time that cannot be spent looking for crabs. Use a production possibilities frontier to describe the idea of “efficiency.” (1 Mark) 1 See answer samikhann89 is waiting for your help. Which point or points are unattainable? Thus, producing efficiently leads to maximum production, which is what the PPF shows. Legal. However, any choice inside the production possibilities frontier is productively inefficient and wasteful because it’s possible to produce more of one good, the other good, or some combination of both goods. ". Step-by-step solution: 93 %(14 ratings) Use a production possibilities frontier to describe the idea of efficiency. An outcome is efficent if the economy is getting all it can from scarce resources it has available.. All choices along the PPF in Figure 2, such as points A, B, C, D, and F, display productive efficiency. Points on the production possibilities curve thus satisfy two conditions: the economy is making full use of its factors of production, and it is making efficient use of its factors of production. 1.2.2 Production Possibilities Frontier: Definition 2:39. Define efficiency and describe an efficient use of resources. If the U.S. moved from point A to B and produced only sugar cane, this would result in a large opportunity cost in terms of foregone wheat production. 2 See answers PHYSCOROCKER PHYSCOROCKER Answer: jd paakar dp se kskskslabeoworwpnrwpbtkwndpqbf. C. What are the two subfields of economics? The production possibilities frontier can illustrate two kinds of efficiency: productive efficiency and allocative efficiency. Therefore, there is only a finite amount of any one good that can be produced, and the scarce resources must be carefully allocated. If the society is producing the quantity or level of education that the society demands, then the society is achieving allocative efficiency. When a point on the production possibilities curve is reached, it is referred to as technical efficiency, indicating that resources are fully and efficiently used. 2 - Should an economic model describe reality exactly? 2 - Draw and explain a production possibilities... Ch. Productive efficiency (or production efficiency) is a situation in which the economy or an economic system (e.g., a firm, a bank, a hospital, an industry, a country, etc.) An efficient washing machine operates at a low cost. This preview shows page 2 - 5 out of 6 pages. The concept of Pareto efficiency can be applied to the production-possibility frontier Production-Possibilities Frontier The Production-Possibilities Frontier refers to the idea that in a given economy, factors of production such as labor and capital are scarce. This makes sense if you remember the definition of the PPF as showing the maximum amounts of goods a society can produce, given the resources it has. 2. What is the difference between a positive and a normative statement? JAN2018 ECO-111 Written Asssignment 1.docx, Written Assignment 1 - Ariane Ferreira.docx. 1. As the population ages, the society will shift resources toward health care because the older population requires more health care than education. By moving from point A to point B, Brazil would give up a relatively small quantity in wheat production to obtain a large production in sugar cane. A production possibility frontier (PPF) shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed arrow_back. It is also called the production possibility curve or product transformation curve. Consider the following diagram of an economy with outputs of Good A on the x-axis and Good B on the y-axis: Consi… Ask your question. Answered Use a production possibilities frontier to describe the idea of efficiency. 3. Briefly explain why. 1. In a market-oriented economy with a democratic government, the choice will involve a mixture of decisions by individuals, firms, and government. The basic economic problem of scarcity on which Robbins’ definition of economics is based, can be … Laundry Costs. At point H 1, 2 000 laptops and 10 000 mobile phones are produced, which is less than the potential output.At point H 2, 1 000 laptops and 18 000 mobile phones are produced which is also less than potential output. Join now. It shows businesses and national economies the optimal production levels of two distinct capital goods competing for the same resources in production, and the opportunity cost associated with either decision. Use a production possibilities frontier to describe the idea of “efficiency”. When the economy is using its resources efficiently, it cannot increase the production of one good without reducing the production of the other. The efficiency measure is named after Vilfredo Pareto, an Italian engineer and economist. In … 3 Use a production possibilities frontier (PPF) to describe efficiency. Give an example of each. Use the production possibilities frontier to illustrate the economic problem. c. Which point or points are inefficient? The production possibilities frontier can illustrate two kinds of efficiency: productive efficiency and allocative efficiency. When countries engage in trade, they specialize in the production of the goods in which they have comparative advantage and trade part of that production for goods in which they don’t have comparative advantage in. It is possible to describe the various points, What is the difference between a positive and a normative, Explain how absolute advantage differs from comparative, What are the factors that determine the quantity of a good that, This textbook can be purchased at www.amazon.com. Every economy faces two situations in which it may be able to expand the consumption of all goods. As it does, the production possibilities frontier for a society will tend to shift outward, and society will be able to afford more of all goods. 4. To describe the concept of the production possibilities frontier, assume that we live on an island that has only two cities (Lake and Desert), and two industries (cars and airplanes). Draw and explain a production possibilities frontier for an economy that produces milk and cookies. 1. What happens to this frontier if disease kills half of the e | SolutionInn Clearly, Brazil has a lower opportunity cost of producing sugar cane (in terms of wheat) than the U.S. Efficiency. 2 - Use a production possibilities frontier to... Ch. The production possibilities curve is also called the PPF or the production possibilities frontier. Use a production possibilities frontier (PPF) to describe efficiency. Wasting scarce resources means the society is not producing as well or as much as it could, so it is not operating on the PPF. 3. Efficiency is greatest when diminishing returns is at its most efficient point. But for both the government and the market economy, in the short term, increases in production of one good typically mean offsetting decreases somewhere else in the economy. The LibreTexts libraries are Powered by MindTouch® and are supported by the Department of Education Open Textbook Pilot Project, the UC Davis Office of the Provost, the UC Davis Library, the California State University Affordable Learning Solutions Program, and Merlot. When theproduction of the two goods lies on the frontier, anywhere on the frontier is deemed to be productionefficient and production inside frontier is inefficient. The production possibilities frontier is used to illustrate the economic circumstances of scarcity, choice, and opportunity cost. (This question can be answered either with or without the use of a graph, depending on whether you have a graphing program on your computer. Answer to Use a production possibilities frontier to describe the idea of “efficiency.”. Use a production possibilities frontier to describe the idea of efficiency. Production possibility frontier or curve is an important concept of modern economics. Course Hero is not sponsored or endorsed by any college or university. 1 See answer bullsfan5984 is waiting for your help. One can easily see this with a simple observation of the extreme production points in the PPFs. Production possibility frontiers and economic efficiency 1. production possibility frontiers and economic efficiency IntroductionThe Production Possibilities Frontier (PPF) shows the maximal combinations of two goods that can beproduced during a specific time period given fixed resources and technology and making full andefficiency use of available factor resources. Use a production possibilities frontier to describe the idea of "efficiency." (This question can be answered either with or without the use of a graph, depending on whether you have a graphing program on your computer. Use a production possibilities frontier to describe the idea of "efficiency." Answer of Use a production possibilities frontier to describe the idea of “efficiency.” Download in DOC 1.9 Use the following production possibilities frontier for a country to answer the questions. What happens to this frontier if a disease kills half of the economy s cows? Production points inside the curve show an economy is not producing at its comparative advantage. 4. Explain what each subfield studies. The production-possibility frontier determines whether a company is using its resources efficiently or not. The specific choice along a production possibilities frontier that reflects the mix of goods society prefers is the choice with allocative efficiency. arunanookala1983 arunanookala1983 Answer: Yes, it is necessary that the service sector should contribute maximum to GDP of an economy. In terms of our production possibilities curve, this is represented by a point such as H 1 which lies inside the production possibilities curve. Productive efficiency requires minimizing theopportunity cost for a given value of output. The production-possibility frontier is an economic concept used to describe how much a company can rationally be expected to produce. Due to its climate, Brazil can produce a lot of sugar cane per acre but not much wheat. The Production Possibilities Frontier (PPF) shows the maximal combinations of two goods that can be produced during a specific time period given fixed resources and technology and making full and efficiency use of available factor resources. Add your answer and earn points. Sometimes, the production possibility frontier does not look like a curve—instead, it’s linear, meaning that it’s simply a straight line. In some of the economies the prime share of GDP comprises of agricultural … This is the point that any society should strive to reach, since it indicates that the society is indeed making the best use of its scarce resources. Want to see this answer and more? Productive and Allocative Efficiency We will learn to model scarcity using the Production Possibilities Frontier that allows us to visualize tradeoffs, distinguish between efficient, inefficient and unattainable points. If, however, it devoted all of its resources to producing sugar cane instead, it would be producing a much larger amount, at point B. Principles of Macroeconomics Use a production possibilities frontier to describe the idea of Use a production possibilities frontier to describe the idea of “efficiency.” Use a production possibilities frontier to describe the idea of $9.99 – Tutor Price To Unlock/Access… 3 Use a production possibilities frontier (PPF) to describe efficiency. On a production possibilities frontier, an outcome is efficient of the point is on the curve (point A). Inefficient and Infeasible Points. Efficiency is greatest when diminishing returns is at its most efficient point. The opposite is true for the U.S. B. We will also discuss how economic growth affects our options and allows us to achieve the previously unattainable. You are forced to make a decision on how to allocate the scarce reso… Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes! Suppose two countries, the U.S. and Brazil, need to decide how much they will produce of two crops: sugar cane and wheat. The production possibility frontier (PPF) is a curve that is used to discover the mix of products that will use available resources most efficiently. For example, point R is productively inefficient because it is possible at choice C to have more of both goods: education on the horizontal axis is higher at point C than point R (E2 is greater than E1), and health care on the vertical axis is also higher at point C than point R (H2 is greater than H1). Calculate opportunity cost. With trade, goods are produced where the opportunity cost is lowest, so total production increases, benefiting both trading parties. Check out a sample textbook solution. Use a production possibilities frontier to describe the idea of “efficiency.” 68 % (374 Review) Use a production possibilities frontier to describe the idea of “efficiency.” Productive efficiency means that, given the available inputs and technology, it’s impossible to produce more of one good without decreasing the quantity of another good that’s produced. In particular, its slope gives the opportunity cost of producing one more unit of the good in the x-axis in terms of the other good (in the y-axis). We also acknowledge previous National Science Foundation support under grant numbers 1246120, 1525057, and 1413739. Economic production efficiency refers to a level in which an entity has reached maximum capacity. A b. When the combination of goods produced falls inside the PPF, then the society is productively inefficient. At the individual and firm level, the market economy coordinates a process in which firms seek to produce goods and services in the quantity, quality, and price that people want. The production possibilities frontier can illustrate two kinds of efficiency: productive efficiency and allocative efficiency. Use a production possibilities frontier to describe the idea of efficiency. Allocative efficiency means that the particular mix of goods being produced—that is, the specific choice along the production possibilities frontier—represents the allocation that society most desires 0.8 1 1.2 1.4 1.6 1.8 2 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 4 3 https://assessments.lumenlearning.co...sessments/7095, https://assessments.lumenlearning.co...sessments/7096. In our example, Brazil has a comparative advantage in sugar cane, and the U.S. has a comparative advantage in wheat. 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