It is an important tool to solve the central economic problems. A production possibility frontier is a curve that represents the rates of production of two commodities that use the same factors of production within a specified period (Bradford, 2007). 12. 3. Figure 2.13 Economic Growth and the Production Possibilities Curve. Production Possibility Curves Objectives 1. An economy capable of producing two goods, A and B, is initially operating at point M on production possibilities curve OMR in Panel (a). The nature of basic economic problems explained above can be better understood and distinguished from each other with the aid of an important tool of modem economics known as production possibility curve. Given this production possibilities curve, the economy could not produce a combination such as shown by point N, which lies outside the curve. The basic economic problem of scarcity on which Robbinsâ definition of economics is based, can be explained with the aid of production possibility curve. Because the production possibilities curve for Plant 1 is linear, we can compute the slope between any two points on the curve and get the same result. Thus, any point on the curve is not only a full-employment point but also an efficient point. 2. Figure 2.10 Economic Growth and the Production Possibilities Curve. To define the implications of scarcity in an economic system. This concept is used to explain the various economic problems and theories. It describes all the possible combinations of any two commodities that can be produced by an economic system by using all resources with maximum possible efficiency. Given this production possibilities curve, the economy could not produce a combination such as shown by point N, which lies outside the curve. To understand the economic implication of the production possibility curve model. Production possibility curve is also called production possibility frontier. The focus of all such, points is the production possibilities curve (PPC) of society. Introduction Important Questions for Class 12 Economics Central Problems of An Economy, Production Possibility Curve and Opportunity Cost. Production possibility frontier or curve is an important concept of modern economics. An economy capable of producing two goods, A and B, is initially operating at point M on production possibilities curve OMR in Panel (a). Ans: Production possibility curve is a graphical representation which helps to analyse and illustrate the pertinent problem of choice. ADVERTISEMENTS: Assumptions Made while Drawing Production Possibility Curve! With this meaning we have several other aspects also to ⦠Uses of Production Possibility Curve . The slope of Plant 1âs production possibilities curve measures the rate at which Alpine Sports must give up ski production to produce additional snowboards. To define the meaning of production possibility curves. It further helps to identify an ideal combination of two commodities to produce them both with the available resources. During this period, the technology that affects the process of production is assumed to be constant. One tool they use to do so is a production possibility curve, which displays the different combinations of two items that a business can make with the same fixed combination of resources. Production Possibilities Schedule The table showing different possibilities of production of two goods is called production possibility schedule. It is also known as transformation curve or production possibility frontier. 1.Economic Problem Problem of choice or a problem of allocation of resources is the major economic problem which arises due to scarce resources and alternative uses of resources. 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