What is production possibility curve explain with diagram?
The production possibility curve represents graphically alternative production possibilities open to an economy. The productive resources of the community can be used for the production of various alternative goods. But since they are scarce, a choice has to be made between the alternative goods that can be produced.
What is an example of an underground economy?
Underground Economy. The underground economy involves the exchange of goods and services which are hidden from official view. Examples of such activities range from babysitting “off the books” to selling narcotics.
What are the 4 factors that shift the production possibilities curve?
Shifts in the production possibilities curve are caused by things that change the output of an economy, including advances in technology, changes in resources, more education or training (that’s what we call human capital) and changes in the labour force.
What is production possibility curve in microeconomics?
The production possibilities curve (PPC) is a graph that shows all of the different combinations of output that can be produced given current resources and technology. Sometimes called the production possibilities frontier (PPF), the PPC illustrates scarcity and tradeoffs.
What is production possibility curve PDF?
Production possibilities frontier (PPF) shows the maximum attainable combinations of two products that may be produced if we use our resources efficiently. Sometimes economists call this Production Possibilities Curve (PPC). PPF or PPC, we mean the very same thing by them.
What is the shape of PPC?
PPC is concave-shaped because more and more units of one commodity are sacrificed to gain an additional unit of another commodity. However, if there is unemployment or inefficiency in resource utilisation, then we can produce at any point inside the PPC. This concept explains the production possibilities curve.
What is underground economy explain briefly?
underground economy, also called shadow economy, transaction of goods or services not reported to the government and therefore beyond the reach of tax collectors and regulators.
How does underground economy affect the economy?
Executive summary. Underground economy (UE) activity negatively affects economic growth in Canada and reduces tax revenues for all levels of government, putting pressure on the government’s ability to provide the services and benefits that Canadians enjoy and expect.
What is production possibility curve PPT?
1. The Production Possibility Curve (PPC) A PPC shows all the combinations of two ‘goods’ which can be provided if all resources are being used efficiently.
Is PPC concave or convex?
Answer: PPC is concave shaped because of increasing marginal rate of transformation. It implies that more and more units of commodity sacrificed to gain an additional unit of another commodity. PPC is convex shaped because of decreasing marginal rate of transformation.
What is PPC and its properties?
PPC is the curve which shows the combinations of two goods and services that can be produced with fuller the utilisation of a given amount of resources in the most efficient way and with a given production technology. Properties of PPCa Concave to the origin : PPC curve is concave to the origin.
Why is there underground economy?
There are a variety of reasons why people engage in the underground economy. These reasons can be as simple as obtaining items that they can not legally buy, such as outlawed drugs and weapons. It can also be to avoid taxes, labor laws, and administrative paperwork.
How does the underground economy affect the economy?
Underground economy (UE) activity negatively affects economic growth in Canada and reduces tax revenues for all levels of government, putting pressure on the government’s ability to provide the services and benefits that Canadians enjoy and expect.
What is underground production?
c) to avoid meeting certain legal standards such as minimum wages, maximum hours, safety or health standards, etc; d) to avoid complying with certain administrative procedures, such as completing statistical questionnaires or other administrative forms. Source Publication: SNA 6.34.
What causes underground economy?
The underground economy refers to economic transactions that are deemed illegal, either because the goods or services traded are unlawful in nature, or because transactions fail to comply with governmental reporting requirements.
Why is PPF concave?
PPF is concave shaped because of increasing marginal opportunity costs, i.e. more and more units of one commodity are sacrificed to gain an additional unit of another commodity.
What are the properties of production possibility curve?
The two basic property of production possibility curve are: It slopes downward from left to right- Production possibility curve slopes downward because both the variables involve in the equation are inversely related as one increase then other one decreases and vice versa because the resources are constant.
What does the production possibility curve represent?
The production possibility curve represents graphically alternative production possibilities open to an economy. The productive resources of the community can be used for the production of various alternative goods.
What does the production possibilities model tell us?
The production possibilities model does not tell us where on the curve a particular economy will operate. Instead, it lays out the possibilities facing the economy.
What could leave an economy at a point inside its possibilities curve?
Two things could leave an economy operating at a point inside its production possibilities curve. First, the economy might fail to use fully the resources available to it. Second, it might not allocate resources on the basis of comparative advantage.
What does the bowed out production possibilities curve for alpine sports illustrate?
The bowed-out production possibilities curve for Alpine Sports illustrates the law of increasing opportunity cost. Scarcity implies that a production possibilities curve is downward sloping; the law of increasing opportunity cost implies that it will be bowed out, or concave, in shape.