As one may observe, as the units of produced goods increases, the number of units of produced services decreases. The maximum number of units of goods can be produced only if no units of services are produced at the same time.
A d) if the country's economy is producing on its production possibility frontier, the opportunity cost cannot be increased, it cannot be exploited in order to increase the production of goods and services. Therefore, in order to increase production, the country's production possibility frontier must be changed. This could take place by increasing the country's production capacity.
This situation can be influenced by quantities of available resources, on the one hand, and by technological progress, on the other hand. In our case, the situation is influenced by technological progress, which determines increased production with a given quantity of resources.
The dotted lines represent the new values of units of produced goods and the new production possibility curve. The number of units of produced services has remained unchanged.
2. a) the most important ingredients used in producing bread are flour, produced from processed wheat, and butter or margarine. If the price of wheat increases, this will lead to increased production costs, which will also determine the price of bread to increase. Bread is a good for which no substitute exists. Of course, there are other goods with similar qualities, like nutritive value or protein composition, for example rice, pasta and potatoes, but the competition between these goods can be considered indirect. For example, one cannot eat gem and butter with pasta or potatoes, but only with bread. For such goods, the demand is relatively inelastic. In other words, if the price of bread increases, the demand will remain generally constant, and people who usually eat bread will...
Economics The production possibilities curve represents the maximum level at which a country can produce. Freer trade, such as what the EU has promoted since its inception, allows countries to do two things. The first is that it allows them to produce at their production possibilities curve. This occurs because the country under free trade conditions is going to produce those goods in which it has a comparative advantage. This improves
Examples like this occur throughout the EU, whereas at one point many nations within Europe had their own industries for most goods. The standard of living in Europe has increased over the time that the EU has been around, but that can be said of most nations on Earth. The key to evaluating Europe's progress under the EU experiment is to consider if the standard of living in Europe is
Market equilibrium occurs when supply and demand are at their optimal level, when supply is equal to demand and ideally the price commanded earns a profit for the producer yet is not prohibitively high for the purchaser of the good. To reach this, there is always a period of negotiation. As price goes up, demand goes down, and as the price goes down, demand goes up. As the price goes
Production Possibilities Production possibility curves are representation of the amount of two different goods that can be obtained by shifting resources from the production of one, to the production of the other. In addition, the graph represents maximum specified production level of one commodity that results given the production level of the other (Samuelson, 1962). The curve is used to describe consumers' choice between two different goods. The curves represent a wide
Economics Scenario In the first phase, the price of coffee increased and thus lured producers into the market. This caused the supply to move up the curve. The increased supply caused the demand to decrease and thus caused the overproduction. The mechanism is shown below graphically. The graph shows the coffee market at an equilibrium price of 3.25. The increase in price caused the supply to rise and the demand to fall. This
These decisions necessarily entail that some potentially productive opportunities are sacrificed in order to make what is estimated as the most productive choice. Supply and demand refer to specific products and services, the ability to provide these, and the level at which they are desired by the target market. Buyers desire a product or services, and therefore demand a certain quantity of these at a certain price. The relationship between
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