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Chapter 12: Q.28 (page 297)

What does a point inside the production possibility frontier represent?

Short Answer

Expert verified

Inefficient resource allocation is represented by a point inside the production possibility frontier.

Step by step solution

01

Introduction

PPF stands for Production Possibility Frontier. It's a graph that shows the most cost-effective combinations of two items that can be made with limited resources.

02

Explanation

The PPF curve (shown below) depicts several combinations (from P to T) of economic output and environmental protection that are both productively efficient but have differing balances of both variables. PPF has the point M, which represents a combination of less than half of both variables. If the yield of variables is low, it suggests the variables are not being used efficiently or optimally. As a result, the resulting combination is inside the curve rather than on it. As a result, in terms of productivity,Mis inefficient.

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Most popular questions from this chapter

Technological innovations shift the production

possibility curve. Look at graph you sketched for

Exercise 12.13 Which types of technologies should

a country promote? Should 鈥渃lean鈥� technologies be

promoted over other technologies? Why or why not?

What is command-and-control environmental regulation?

Table 12.5 provides the supply and demand conditions for a manufacturing firm. The third column represents a supply curve without accounting for the social cost of pollution. The fourth column represents the supply curve when the firm is required to account for the social cost of pollution. Identify the equilibrium before the social cost of production is included and after the social cost of production is included.

Is zero pollution an optimal goal? Why or why not?

In a market without environmental regulations, will the supply curve for a firm account for private costs, external costs, both, or neither? Explain.
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