The productive resources of the community can be used for the production of various alternative goods.
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The slope defines the rate at which production of one good can be redirected (by reallocation of productive resources) into production of the other.
Cambridge, MA: Harvard University Press.Drugs/Alcohol/Sex related content, content that could be offensive to others.As we move from A to F, we sacrifice increasing amounts of cotton."Summary on Factor-Price Equalization".An introduction to positive economics (fourth.).In the long run, if technology improves or if the supply of factors of production increases, the economy's capacity to produce both goods increases; if this potential is realized, economic growth occurs.This downward sloping line represents the trade off between producing product A and product.The sacrifice in the production of the second good is called the opportunity cost (because increasing production of the first good entails losing the opportunity to produce some amount of the second).Equilibrium for a firm will be the combination of outputs on the PPF that is most profitable.Swedish Journal of Economics.If the two production goods depicted are capital investment (to increase future production possibilities) and current consumption goods, the higher is investment this year, the more the PPF would shift out in following years.In contrast, if the economy wild fx pro keygen ps2 spiderman 2 game is operating below the curve, it is said to be operating inefficiently because it could reallocate resources in order to produce more of both goods or some resources such as labor or capital are sitting idle and could be fully.South Africa: Pearson Education.International Economic Review, Vol.1 If production is efficient, the economy can choose between combinations (points) on the PPF: B if guns are of interest, C if more butter is needed, D if an equal mix of butter and guns is required.One key assumption the PPC makes is that all resources for production are fixed.
Thus, MRT increases in absolute size as one moves from the top left of the PPF to the bottom right of the PPF.