Why is a point outside the PPC said to be unattainable?

Points that lie above the production possibilities frontier/curve are not possible/unattainable because the quantities cannot be produced using currently available resources and technology.

Are points outside PPF unattainable?

The PPF separates attainable combinations from unattainable ones. Figure 3.2 shows attainable and unattainable combinations. Points outside the PPF such as point G are unattainable. We can produce at any point inside the PPF or on the frontier.

What does it mean if a point is outside the PPF curve?

unattainable
Key takeaways. A production possibilities frontier, or PPF, defines the set of possible combinations of goods and services a society can produce given the resources available. Choices outside the PPF are unattainable (at least in any sustainable way), and choices inside the PPF are inefficient.

What is an unattainable point?

A point that lies above or on the right side of the PPF is not attainable because the economy falls short of resources or technology to produce that level of output. The maximum capacity of the economy has already been exhausted.

What does a point inside the curve of a PPC indicate quizlet?

Any point inside a production possibilities curve indicates: unemployment and/or inefficiency. If an economy is producing a combination of goods that places it on the production possibilities curve, then it has: full employment.

Why is the PPF concave?

PPF is Concave Shaped:

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 main assumption of PPF?

The production possibility curve is based on the following Assumptions: (1) Only two goods X (consumer goods) and Y (capital goods) are produced in different proportions in the economy. (2) The same resources can be used to produce either or both of the two goods and can be shifted freely between them.

What would production at a point outside the production possibilities curve indicate what must occur before the economy can attain such a level of production?

Production outside the curve cannot occur (consumption outside the curve could occur through foreign trade). To produce beyond the current production possibilities curve this economy must realize an increase in its available resources and/or technology. CONSIDER [1] What is an opportunity cost?

Why is PPF convex?

The production possibility curve is convex outward from the origin because some of the economy’s resources are better able to produce good X than good Y while other resources in the economy are better able to produce good Y than good X.

Why the PPF curves inward toward the axis of curve concave to the origin?

PPF is concave to origin because of the increasing marginal opportunity costs. That is more and more units of one commodity are sacrificed to gain an additional unit of another commodity. Due to this increasing marginal cost, PPF becomes more and more steep, thus the curve bends outwards and becomes concave to origin.

Why is PPC negatively sloped?

The downward sloping nature of the PPC is due to the law of increasing opportunity cost. According to this law, with the fuller utilisation of the given resources, in order to produce an additional unit of one good, some of the resources are to be withdrawn from the production of another good.

What happens when PPC is convex?

When the PPC is a straight line, opportunity costs are the same no matter how far you move along the curve. When the PPC is concave (bowed out), opportunity costs increase as you move along the curve. When the PPC is convex (bowed in), opportunity costs are decreasing.