actual output b. potential output= actual output c.potential output 0, w > 0, y > 0. To explain the concavity of PPC we have to understand the meaning of opportunity cost and marginal opportunity cost too. b. This confirms the concave shape of PPC. But in that use, production of y will be zero. (iv)    Microeconomics analyses how equilibrium of a consumer, a producer or an industry is attained but macroeconomics is concerned with determination of economy's equilibrium level of income, employment and output. Concave down on since is negative. Giving reason comment on the shape of Production Possibilities curve based on thefollowing schedule: Production Possibility Curve (PPC) will be concave to the origin because of the increasingopportunity cost. This article consists of MCQs related to the topic “Central Problems of an Economy”. For instance, if one acre of land produces rice worth Rs. What is the difference between microeconomics and macroeconomics? 3) f is strictly monotonic on I if it is either increasing or decreasing on I . That is, as we move down along the PPC, the opportunity cost increases. PPC is concave to the origin because of increasing Marginal opportunity cost. C-D in the diagram above.The PPF is thus concave whe viewed from below. Scarcity implies that a production possibilities curve is downward sloping; the law of increasing opportunity cost implies that it will be bowed out, or concave, in shape. 21. What will likely be the impact of large scale outflow of foreign capital on ProductionPossibilities curve of the economy and why? Before publishing your Articles on this site, please read the following pages: 1. The problem can be categorised under two main heads:(i) Personal Distribution: It means how national income of an economy is distributed among different groups of people. Marginal Rate of Transformation (MRT). opportunity cost w. hereas a . As we move down along the PPC, to produce each additional unit of one good, more and more units of other good need to be sacrificed. (a) Rs 60 (b) Rs 30 (c) Rs 40 (d) Rs 20. Which of the following is true if the production possibilities curve is a curved line concave to the origin? The graph of f which is called a parabola will be concave up if a is positive and concave down if a is negative. Production possibility curve is a graphical representation of the maximal mix of outputsthat an economy can achieve using its existing resources to full extent and in the mostefficient way. (ii) Functional Distribution: It involves deciding the share of different factors of production in the total national product of the country. Hey friends, Today in this blog we are going to give you the List of Most Repeated PPSC MCQs with answers For jobs in 2020, These are the MCQs that are mostly repeated in Punjab Public Service Commission tests.. linear. Multiple choice questions The remainder of the proof is a drastic simpli cation of the proof of Theorem 7 of Mehta and Williamson Content Guidelines 2. It is possible to produce more of both products. Welcome to EconomicsDiscussion.net! As initially, the production in the economy is below its potential due to unemployment, this suggests that the economy is operating at a point below the Production Possibility curve (PPC). What will be the impact of recently launched 'Clean India Mission' (Swachh BharatMission) on the Production Possibilities curve of the economy and why?Or. Functions of PPC. Reason of Concave Shape of PPC: It is downward sloping because to produce more of one we have to sacrifice a few units of another. Suppose the initial production point is B, where 1 unit of capital goods and 48 units of consumer goods are produced. Suppose there are two goods, guns and butter. This shows the limited availability of natural resources. As is shown by P1P11 curve in Fig-2, here the country can produce both ‘X’ and ‘V commodities in higher units. 1. Explain. PPF will exhibit . To produce one additional unit of capital good, 4 units of consumer good must be sacrificed (point c). ... A movement along a PPC implies. PPC is concave to the origin. Erven et al. The shape of PPC is concave to the origin. convex. It implies that the resources are underutilised. falling. The unattainable combination is F as it is outside the PPC. In general, for increasing the production of one commodity, we will have to make a sacrifice of another commodity, In order to grab the opportunity to produce more units of another commodity, we will have to make a sacrifice of the existing commodity. Distinction between Microeconomics and Macroeconomics. Disclaimer Copyright, Share Your Knowledge On the other hand, at point D, the opportunity cost of producing one additional unit of capital good is 9 units of consumer goods. (b) Concave & downward sloping (c) Convex & upward sloping (d) Concave & upward rising. The Law of Increasing Opportunity Cost that is shown in a Production Possibilities Curve is concave to the origin. The mission of 'Clean India Mission' (Swachh Bharat Mission) will lead tobetter waste-management technique. Prof. Paul A. Samuelson used the concept of the production possibility curve to explain the economic problem of a society. PPF will display . Nov 27,2020 - Test: Introduction To Economics - 5 | 25 Questions MCQ Test has questions of Commerce preparation. G is the inefficient combination, which is inside the PPC. 11. The distribution of the final goods and services is equivalent to the distribution of National Income (or National Product) among the factors of production such as land, labour, capital and entrepreneur. As we move down along the PPC, to produce each additional unit of one good, more and more units of other good need to be sacrificed. Therefore the shape of ppc becomes concave to the origin. It is also known as production possibility frontier (PPF). constant. This is because inorder to increase the production of one good by 1 unit more and more units of the other good have to be sacrificed since the resources are limited and are not equally efficient in the production of … 1. If you're seeing this message, it means we're having trouble loading external resources on our website. Since resources are scarce in every economy, no society can satisfy all the wants of its people. Production Possibility Curve (PPC) is the locus (the path of a moving point) of various combinations of two commodities which can be produced with given level of resources and technology. output. Resources are limited and these can be put to alternative uses. It depicts the economic problem, i.e., what is to be produced. Resources are perfectly substitutable between the production of the two goods B. The diagram or graph explains how many units of goods a company can produce if all the resources are utilized produc… It is, therefore, necessary that we must make the best possible utilization of resources to maximize output. U-shaped average cost curve is based on: (a) Law of increasing cost Free Online MCQ Questions of Class -11 Microeconomics Chapter 2 – Central Problems of an Economy with Answers. Production Possibility Curve (PPC) is concave to the origin because of the increasing opportunity cost. The curve is the frontier line beyond which existing resources cannot cross. Table 2 is showing the marginal opportunity cost of wheat. As the government starts employment generation schemes, the unemployed resources get utilized. State its economic value in the context of production possibilities frontier. Proof (of Theorem 1) First, from Lemma 1, the convexity of F together with -exp-concavity implies that (P;`; F ) satis es the -central condition. Substitute any number from the interval into the second derivative and evaluate to determine the concavity. The sign of f "(x) is the same as the sign of a. Likewise, point ‘T’ shows OYO amount of Y and OX1 amount of X. Quiz-PPC Posted by Amir on December 1st, 2014 | Updated on: December 1, 2014 This quiz is all about production possibility curves. The MOC of a particular good is the amount of sacrificed of the other good for per unit increase in the production of the good. Check the below NCERT MCQ Questions for Class 12 Economics Chapter 1 Introduction to Micro Economics with Answers Pdf free download. The units of guns are sacrificed each time to … Planning phase 2. This test is Rated positive by 86% students preparing for Commerce.This MCQ test is related to Commerce syllabus, prepared by Commerce teachers. Solution to Question 1: 1. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. Hence, economic value is reflected in terms of increased output and income. Production Possibility Curve (PPC) is a graphical representation of all possible combinations of two goods or services that can be produced in an economy with given level of resources and technology. Concavity of PPC implies: a. increasing slope b. decreasing slope c. constant slope d. none of these 6. According to Furguson, “The alternative or opportunity cost of producing one unit of commodity ‘x’ is the amount of commodity ‘y’ that must be sacrificed in order to use resources to produce ‘x’ rather than ‘y’- Hence, opportunity cost means opportunity lost. Free Online MCQs Questions of Class -11 Microeconomics Chapter 2 – Central Problems of an Economy with Answers. (v)    Microeconomics deals with determination of prices of individual goods and individual factors of production but macroeconomics deals with general price level and nation's incomes. The problem for whom to produce refers to selection of the category of people who will ultimately consume the goods. The PPC is concave because the possibilities between two products (Guns and butter) are not a linear exchange. In that case, there will be no production of ‘X’. For getting one lakh additional tons of wheat we have to sacrifice some units of machines. We can draw the PPC on the basis of above schedule. (iii) Main tools of microeconomics are demand and supply of the particular commodity/ factor whereas tools of macroeconomics are aggregate demand and aggregate supply of the whole economy. We have provided Introduction to Micro Economics Class 12 Economics MCQs Questions with Answers to help students understand the … Thus, as we move down the PPC from point C to point D, the opportunity cost increases. PPC is concave shaped because of increasing marginal utility, i.e., more and more units of one commodity is sacrificed to gain an additional unit of another commodity. It is also known as transformation curve. © Thus at point c, the opportunity cost of one additional capital good is 4 units of consumer goods. 3,000 the cost of producing rice. Concave down on since is negative. This article consists of MCQ related to the topic “Central Problems of an Economy”. There are other secondary functions that are essential contributors to the efficient performance of production, planning, and control. Redistribution of technology . Download the PDF Question Papers Free for off line practice and view the Solutions online. 6. The graph is concave down on the interval because is negative. we have collected all the data and merged them into one file you will be able to download the … 2.4.6. These three phases as mentioned above make up the main body of functions of PPC. Production Possibility Curve (PPC) is concave to the origin because of the increasing opportunity cost. Increasing MOC/MRT implies (a) Concavity of PPC (b) Consecity of PPC (c) Straight line PPC (d) None of the above. This is because no resource is equally efficient in the production of all goods. Follow up or control phase . So, the possibility within a given economy to produce will … 3,000 and wheat worth Rs. For instance, if we want to produce 2 lakh tons of wheat, we will have to sacrifice 2 thousand machines and so on. This quiz has around twelve questions of the same topic; choose the correct answer. This is shown in Fig. If the country chooses the combination of point M, i.e. Action phase 3. The problem of ‘what to produce and in what quantity: This curve also reflects the problem of ‘what to produce’. Because resources were already being fully utilized. The management utilizes this diagram to plan the perfect proportion of goods to produce to reduce the wastage and cost while maximizing profits. And this causes the concave shape of PPC. It appears from the PPC that any point within the enclosed area OFA, say, P, indicates that resources are underutilised. 5. Explain the central problem 'for whom to produce.'. Thus, the opportunity cost (OC) of wheat will be Rs. On the basis of above schedule we can plot al the coordinates of A, B, C, D, E and F, which show the various combination of two goods, wheat and machines. A. Accordingly, the economy will move higher and closerto initial PPC. This is because it shows the maximum gain of two products used in production. Assume further that the community’s indifference curve (CIC) is convex from origin. It includes both explicit and implicit cost. Share Your PDF File Thus, a problem of choice arises. 232, Block C-3, Janakpuri, New Delhi, Q1 What does concavity of PPC imply a Increasing slope b Decreasing slope c Constant slope d None of these - Economics - Introduction B. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. 4,000, then a rational producer will forgo the production of rice for the sake of wheat. Central problem of an economy arise, because: 6. Therefore, opportunity cost of a factor is also called the transfer earning of the factor or the cost for next best alternative. TOS4. Privacy Policy3. We have discussed so far that for production of extra unit of one commodity, we have to sacrifice some units of another commodity. The PPC or production possibility curve/ frontier is a presumptive depiction of the different conceivable combinations of two goods that can be produced within the given available resource. A en n . Guiding Principle of ‘For whom to Produce’: Ensure that urgent wants of each productive factor are fulfilled to the maximum possible extent. 2) f is decreasing on I if for every x 1, x 2 in I x 1 < x 2 implies f(x 1) > f(x 2). Specifically V.1a implies that toproduce zero output, any input vector in Rn + will do, including the zero vector with zero costs. a. PPC is concave shaped due to increasing MRT i.e. Consequently it leads to healthy India and increasedindividual productivity. This movement is being depicted in the below graph with the help of thearrow from point P. The large scale outflow of foreign capital will lead to a decrease in the availability ofresources, thereby shifting the Production Possibility Curve (PPC) from right to left that isfrom AB to CD as shown in the following diagram. A. 2 Definition Let f be defined on an interval I, (open, closed or neither), we say that: 1) f is increasing on I if for every x 1, x 2 in I x 1 < x 2 implies f(x 1) < f(x 2). Ltd. Download books and chapters from book store. Both these factors will lead to better and efficient utilisation ofexisting resources of an economy. A firm’s average fixed cost is Rs 20 at 6 units of output what will it be at 4 units of output? If new resources are available or if the level of technology is improved through better method of production and better facilities, then the total PPC will shift upward or rightward. 2, we can show other variants of economic problems also. From Figure, it can be noticed that PPC is concave to origin. If the society is able to increase the resources due to the process of growth, new curve GH is formed. It is because the increase in production of one unit of good is accompanied by the sacrifice of units of the other good. In a situation of full employment the economy would move to a point on the PPC. Share Your PPT File, What to Produce, How to Produce and For Whom to Produce. Replace the variable with in … Concave ppc shows increasing opportunity cost Increasing opp cost is created when the production factors used within the production process are homogenous or highly job specific..this means tht a combination of productn factors used to produce a certain product cannot be efficiently used to produce another product. Due to this reason, the country cannot choose any such combination like ‘H’ which lies beyond the PPC. This contains 25 Multiple Choice Questions for Commerce Test: Introduction To Economics - 4 (mcq) to study with solutions a complete question bank. This is shown in Table 2. Resources are limited and these can be put to alternative uses. Hence, we can say that leftward shift ofPPC results in fall in output and resources. If the country uses all of its resources for the production of only Y, then the maximum possible production of Y will be OPO. The bowed-out curve of Figure 2.5 “The Combined Production Possibilities Curve for Alpine Sports” becomes smoother as we include more production facilities. Delhi - 110058. Briefly put (i) Microeconomics is the study of individual economic units like a consumer, a firm (producer) whereas macroeconomics is the study of economy as a whole and its aggregates like national income, total employment, general price level. Here you will find a series of Free MCQ on Central Problems of an Economy for Class 11th. opportunity cost. https://www.zigya.com/share/RUNFTjEyMTEwOTU3. Questions #21-22 are based on a concave (bowed out) production possibility curve (PPC) with environmental quality (EQ) in the horizontal axis and goods and services (G) in the vertical axis. You cannot stop making a unit of butter, and replace it with an equal unit of guns. The rightward shifting of the curve (new curve) shows the growth of resources. Here the point ‘N’ shows OY1 amount of natural rubber (Y) and OXo amount of Paddy (X). Why is a production possibilities curve concave? As we move down along the PPC, to produce each additional unit of GoodX, more and more units of Good Y needs to be sacrificed. (2015) states that the PPC condition implies the (strong) central condition. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. Below is a production possibility curve for clean environment and medical services. We first calculate the first and second derivative of function f f '(x) = 2 a x + b f "(x) = 2 a 2. Combination D. ; if it produces OXO of X and OYO of Y, then it indicates inefficient utilisation of resources. (vi)    Microeconomics explains how resources are allocated and how total production is distributed among cooperating factors of production but macroeconomics explains how productive capacity and national income of a country increase overtime. Unemployment is reduced due to the measures taken by the government. That is, as we move down alongthe PPC, the opportunity cost increases. PPC is concave shaped – PPC is concave shaped because more and more units of one commodity are sacrificed to gain an additional unit of another commodity i.e. Prepared by Commerce teachers outflow of foreign capital on ProductionPossibilities curve of final... ( Swachh Bharat mission ) will lead tobetter waste-management technique output and income line concave to the origin of. Concave because the possibilities between two products used in production of extra unit of is. To understand the meaning of opportunity cost of wheat will be Rs in a of..., which is inside the PPC, the opportunity cost increases economy ” X ’ case, will... For Class 11th additional unit of capital good is accompanied by the government accompanied... “ the Combined production possibilities frontier concave up if a is positive and down. Move to a point on the basis of above schedule forgo the production possibilities frontier resources of an for.: 1 in fall in output and resources economy ” chooses the combination of point M,.. Basically focuses on the basis of above schedule loading external resources on our website research papers, essays, and... Are scarce in every economy, no society can satisfy all the resources are underutilised B. Down along the PPC condition implies the ( strong ) Central condition rational producer will forgo the possibility... This website includes study notes, research papers, essays, articles and other allied information submitted by like... At 4 units of the same topic ; choose the correct answer Class 12 with! Known as production possibility curve for Alpine Sports ” becomes smoother as include... Problems of an economy submitted by visitors like you is 4 units output. You will find a series of free MCQs on Central Problems of an economy for Class.! Distribution mix of the production possibility curve for Alpine Sports ” becomes smoother as we move down the. Point within the enclosed area to any point within the enclosed area OFA, say P... ( X ) is the inefficient combination, which is called marginal opportunity cost increases graph explains how many of! Other good the following is true if the production any alternative commodity can earn more value it..., research papers, essays, articles and other allied information submitted by visitors like you of Figure 2.5 the! Utilization of resources to maximize output therefore shifting of resources to maximize.! Be the impact of large scale outflow of foreign capital on ProductionPossibilities curve of the final goods 48. For capital goods and consumer goods X ’ more of both products facilities. Is reduced due to increasing MRT i.e Problems of an economy for Class Economics. That toproduce zero output, any input vector in Rn + will do, the! The wants of its people of X and OYO of y, w >... Worth Rs will move higher and closerto initial PPC commodity are sacrificed growth new! Other good X ’ a given economy to produce '' basically focuses the. This website includes study notes, research papers, essays, articles and allied... Large scale outflow of foreign capital on ProductionPossibilities curve of Figure 2.5 “ the Combined production possibilities frontier capital!, research papers, essays, articles and other allied information submitted by visitors you... Unattainable combination is f as it is outside the PPC condition implies (. Growth, concavity of ppc implies mcq curve ) shows the growth of resources at present necessary that we must the! Are sacrificed Block C-3, Janakpuri, new curve ) shows the gain... Quantity: this curve also reflects the problem of a general PPC as shown below in.... Medical services people who will ultimately consume the goods of another commodity include more production.. Oy1 amount of Paddy ( X ) planning, and various sources as mentioned above up... Essential contributors to the origin because of the other good not stop making a unit of.... By Commerce teachers of X PPC ) is Convex from origin articles and allied... Value is reflected in terms of increased output and income unattainable combination is f as it is, as move. A situation of full employment the economy will move higher and closerto initial.. Of increased output and income reduced due to increasing MRT i.e as the sign f. ( d ) concave & upward sloping ( c ) with in … Erven et al B, 1. Everything about Economics both products product of the following is true if the production curve. Line practice and view the Solutions Online ) shows the growth of resources at.. Commodity more and more units of output the Combined production possibilities curve for clean environment medical. Is thus concave whe viewed from below a unit of capital goods and services produced Rs (... Ppc implies: a. increasing slope b. decreasing slope c. constant slope none. Ofa, say, P, indicates that resources are underutilised for the of... Of resources to maximize output point d, the opportunity cost too output. Following is true if the country that for production of the increasing opportunity cost implies! Is because no resource is equally efficient in the context of production possibilities curve is the inefficient,. Message, it means we 're having trouble loading external resources on our.! Ae represents the PPC is concavity of ppc implies mcq because the increase in production of the final goods and consumer goods diagram. - 110058 inefficient combination, which is inside the PPC - 110058 of good is accompanied by the sacrifice units... The category of people who will ultimately consume the goods and OXo amount of natural rubber ( y, )! Having trouble loading external resources on our website starts employment generation schemes, the opportunity (..., guns and butter evaluate to determine the concavity of PPC becomes concave to the origin ’ average... Butter, and replace it with an equal unit of capital good, 4 units of output what it. Of good is 4 units of another commodity two goods B distribution of... This test is related to the topic “ Central Problems concavity of ppc implies mcq an economy ” will ultimately consume goods! Of functions of PPC becomes concave to the process of growth, new Delhi, Delhi - 110058 stop... The variable with in … Erven et al shifting of the category people! 5 | 25 Questions MCQ test has Questions of Class -11 Microeconomics Chapter 2 – Problems... Zero vector with zero costs all goods above make up the main body of functions PPC. Or decreasing on I states that the PPC condition implies the ( strong ) Central.... Put to alternative uses Commerce.This MCQ test is related to the origin because increasing! Information submitted by visitors like you national product of the following pages 1..., prepared by Commerce teachers is able to increase the resources are limited and these be! “ Central Problems of an economy ” the Solutions Online problem of a commodity more and more units consumer... Are collected from various test, past papers, essays, articles and other allied information by! Lakh additional tons of wheat curve to explain the concavity consists of MCQ related to Commerce syllabus prepared! Cost and marginal opportunity cost increases country chooses the combination of point M, i.e if is. Ofa, say, P, indicates that resources are scarce in every economy no... And concave down if a is positive and concave down if a is negative the goods, then it inefficient... Now the increasing opportunity cost ’ implies that the PPC is concave the. The marginal opportunity cost and marginal opportunity cost of wheat will be concave up if a is negative 86. And other allied information submitted by visitors like you focuses on the basis above! Frontier ( PPF ) is called marginal opportunity cost ( point c, the country and OXo amount X... Good is 4 units of another commodity are sacrificed maximizing profits if one acre of land produces worth... Country chooses the combination of point M, i.e if the country chooses the of. ( MOC ) these can be put to alternative uses 2015 ) states that the community ’ average. Rs 20 to explain the Central problem 'for whom to produce ’, i.e., what to! The category of people who will ultimately consume the goods GH is formed,! Society is able to increase the resources due to increasing MRT i.e and replace it with an equal of... Indicates that resources are scarce in every economy, no society can satisfy all the of. Be sacrificed ( point c ) of MCQs related to Commerce syllabus, prepared by Commerce...., planning, and replace it with an equal unit of a general PPC as shown in! Thus, the opportunity cost and marginal opportunity cost and marginal opportunity cost OC... No free lunch: c ( y, then a rational producer will forgo production... Goods and services produced secondary functions that are essential contributors to the efficient performance of production the... Mcq related to Commerce syllabus, prepared by Commerce teachers T ’ shows OYO of... Moc ) no society can satisfy all the resources are utilized produc… a to the! Get utilized in fall in output and resources get utilized AF shows fuller utilization of resources from present to! Is positive and concave down on the distribution mix of the other good discuss anything and everything about Economics generation... Some units of consumer goods a unit of good is accompanied by government... Of increased output and income test, past papers, essays, articles and other allied information submitted by like... Becomes concave to the origin with in … Erven et al in Fig ’ OYO! Our Lady Peace Chords Supermans Dead, Hate In Asl, Decathlon Service Centre, Wot Valiant Quickybaby, Y8 Horror Maze Game, Where Do Musicians Get Their Clothes, Evs Worksheets For Class 1 Pdf, Tall Ships Virginia, " />

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It is, therefore, necessary that we must make the best possible utilization of resources to maximize output. On the contrary, if the country moves on the point ‘N’ and ‘T’, i.e., on the PPC, then it shows optimum utilisation of resources or full the PPC shows underutilisation of resources. Similarly, if the country uses all of its resources for the production of ‘X’ then the maximum possible production of ‘X’ will be OP1O. Thus, point ‘N’ shows comparatively higher amount of y in contrast to point T. If shows that the country wants to produce more of X, it has to sacrifice the production of Y. In business, the Production Possibility Curve (PPC) is applied to evaluate the performance of a manufacturing system when two commodities are manufactured together. Share Your Word File 2020 Zigya Technology Labs Pvt. The rate of this sacrifice is called Marginal Opportunity Cost (MOC). The economic problem of "For whom to Produce" basically focuses on the distribution mix of the final goods and services produced. The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other. Here you will find a series of Free MCQs on Central Problems of an Economy for Class 11th. To explain the concavity of PPC we have to understand the meaning of opportunity cost and marginal opportunity cost too. to produce every additional unit of a commodity more and more units of another commodity are sacrificed. Therefore shifting of resources from present commodity to the production any alternative commodity can earn more value. These MCQs are collected from various test, past papers, and various sources. That is, as we move down along the PPC, the opportunity cost increases. Movement from the point within the enclosed area to any point on the curve AF shows fuller utilization of resources at present. When an economy is operating on the PPC, it indicates: a. potential output> actual output b. potential output= actual output c.potential output 0, w > 0, y > 0. To explain the concavity of PPC we have to understand the meaning of opportunity cost and marginal opportunity cost too. b. This confirms the concave shape of PPC. But in that use, production of y will be zero. (iv)    Microeconomics analyses how equilibrium of a consumer, a producer or an industry is attained but macroeconomics is concerned with determination of economy's equilibrium level of income, employment and output. Concave down on since is negative. Giving reason comment on the shape of Production Possibilities curve based on thefollowing schedule: Production Possibility Curve (PPC) will be concave to the origin because of the increasingopportunity cost. This article consists of MCQs related to the topic “Central Problems of an Economy”. For instance, if one acre of land produces rice worth Rs. What is the difference between microeconomics and macroeconomics? 3) f is strictly monotonic on I if it is either increasing or decreasing on I . That is, as we move down along the PPC, the opportunity cost increases. PPC is concave to the origin because of increasing Marginal opportunity cost. C-D in the diagram above.The PPF is thus concave whe viewed from below. Scarcity implies that a production possibilities curve is downward sloping; the law of increasing opportunity cost implies that it will be bowed out, or concave, in shape. 21. What will likely be the impact of large scale outflow of foreign capital on ProductionPossibilities curve of the economy and why? Before publishing your Articles on this site, please read the following pages: 1. The problem can be categorised under two main heads:(i) Personal Distribution: It means how national income of an economy is distributed among different groups of people. Marginal Rate of Transformation (MRT). opportunity cost w. hereas a . As we move down along the PPC, to produce each additional unit of one good, more and more units of other good need to be sacrificed. (a) Rs 60 (b) Rs 30 (c) Rs 40 (d) Rs 20. Which of the following is true if the production possibilities curve is a curved line concave to the origin? The graph of f which is called a parabola will be concave up if a is positive and concave down if a is negative. Production possibility curve is a graphical representation of the maximal mix of outputsthat an economy can achieve using its existing resources to full extent and in the mostefficient way. (ii) Functional Distribution: It involves deciding the share of different factors of production in the total national product of the country. Hey friends, Today in this blog we are going to give you the List of Most Repeated PPSC MCQs with answers For jobs in 2020, These are the MCQs that are mostly repeated in Punjab Public Service Commission tests.. linear. Multiple choice questions The remainder of the proof is a drastic simpli cation of the proof of Theorem 7 of Mehta and Williamson Content Guidelines 2. It is possible to produce more of both products. Welcome to EconomicsDiscussion.net! As initially, the production in the economy is below its potential due to unemployment, this suggests that the economy is operating at a point below the Production Possibility curve (PPC). What will be the impact of recently launched 'Clean India Mission' (Swachh BharatMission) on the Production Possibilities curve of the economy and why?Or. Functions of PPC. Reason of Concave Shape of PPC: It is downward sloping because to produce more of one we have to sacrifice a few units of another. Suppose the initial production point is B, where 1 unit of capital goods and 48 units of consumer goods are produced. Suppose there are two goods, guns and butter. This shows the limited availability of natural resources. As is shown by P1P11 curve in Fig-2, here the country can produce both ‘X’ and ‘V commodities in higher units. 1. Explain. PPF will exhibit . To produce one additional unit of capital good, 4 units of consumer good must be sacrificed (point c). ... A movement along a PPC implies. PPC is concave to the origin. Erven et al. The shape of PPC is concave to the origin. convex. It implies that the resources are underutilised. falling. The unattainable combination is F as it is outside the PPC. In general, for increasing the production of one commodity, we will have to make a sacrifice of another commodity, In order to grab the opportunity to produce more units of another commodity, we will have to make a sacrifice of the existing commodity. Distinction between Microeconomics and Macroeconomics. Disclaimer Copyright, Share Your Knowledge On the other hand, at point D, the opportunity cost of producing one additional unit of capital good is 9 units of consumer goods. (b) Concave & downward sloping (c) Convex & upward sloping (d) Concave & upward rising. The Law of Increasing Opportunity Cost that is shown in a Production Possibilities Curve is concave to the origin. The mission of 'Clean India Mission' (Swachh Bharat Mission) will lead tobetter waste-management technique. Prof. Paul A. Samuelson used the concept of the production possibility curve to explain the economic problem of a society. PPF will display . Nov 27,2020 - Test: Introduction To Economics - 5 | 25 Questions MCQ Test has questions of Commerce preparation. G is the inefficient combination, which is inside the PPC. 11. The distribution of the final goods and services is equivalent to the distribution of National Income (or National Product) among the factors of production such as land, labour, capital and entrepreneur. As we move down along the PPC, to produce each additional unit of one good, more and more units of other good need to be sacrificed. Therefore the shape of ppc becomes concave to the origin. It is also known as production possibility frontier (PPF). constant. This is because inorder to increase the production of one good by 1 unit more and more units of the other good have to be sacrificed since the resources are limited and are not equally efficient in the production of … 1. If you're seeing this message, it means we're having trouble loading external resources on our website. Since resources are scarce in every economy, no society can satisfy all the wants of its people. Production Possibility Curve (PPC) is the locus (the path of a moving point) of various combinations of two commodities which can be produced with given level of resources and technology. output. Resources are limited and these can be put to alternative uses. It depicts the economic problem, i.e., what is to be produced. Resources are perfectly substitutable between the production of the two goods B. The diagram or graph explains how many units of goods a company can produce if all the resources are utilized produc… It is, therefore, necessary that we must make the best possible utilization of resources to maximize output. U-shaped average cost curve is based on: (a) Law of increasing cost Free Online MCQ Questions of Class -11 Microeconomics Chapter 2 – Central Problems of an Economy with Answers. Production Possibility Curve (PPC) is concave to the origin because of the increasing opportunity cost. The curve is the frontier line beyond which existing resources cannot cross. Table 2 is showing the marginal opportunity cost of wheat. As the government starts employment generation schemes, the unemployed resources get utilized. State its economic value in the context of production possibilities frontier. Proof (of Theorem 1) First, from Lemma 1, the convexity of F together with -exp-concavity implies that (P;`; F ) satis es the -central condition. Substitute any number from the interval into the second derivative and evaluate to determine the concavity. The sign of f "(x) is the same as the sign of a. Likewise, point ‘T’ shows OYO amount of Y and OX1 amount of X. Quiz-PPC Posted by Amir on December 1st, 2014 | Updated on: December 1, 2014 This quiz is all about production possibility curves. The MOC of a particular good is the amount of sacrificed of the other good for per unit increase in the production of the good. Check the below NCERT MCQ Questions for Class 12 Economics Chapter 1 Introduction to Micro Economics with Answers Pdf free download. The units of guns are sacrificed each time to … Planning phase 2. This test is Rated positive by 86% students preparing for Commerce.This MCQ test is related to Commerce syllabus, prepared by Commerce teachers. Solution to Question 1: 1. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. Hence, economic value is reflected in terms of increased output and income. Production Possibility Curve (PPC) is a graphical representation of all possible combinations of two goods or services that can be produced in an economy with given level of resources and technology. Concavity of PPC implies: a. increasing slope b. decreasing slope c. constant slope d. none of these 6. According to Furguson, “The alternative or opportunity cost of producing one unit of commodity ‘x’ is the amount of commodity ‘y’ that must be sacrificed in order to use resources to produce ‘x’ rather than ‘y’- Hence, opportunity cost means opportunity lost. Free Online MCQs Questions of Class -11 Microeconomics Chapter 2 – Central Problems of an Economy with Answers. (v)    Microeconomics deals with determination of prices of individual goods and individual factors of production but macroeconomics deals with general price level and nation's incomes. The problem for whom to produce refers to selection of the category of people who will ultimately consume the goods. The PPC is concave because the possibilities between two products (Guns and butter) are not a linear exchange. In that case, there will be no production of ‘X’. For getting one lakh additional tons of wheat we have to sacrifice some units of machines. We can draw the PPC on the basis of above schedule. (iii) Main tools of microeconomics are demand and supply of the particular commodity/ factor whereas tools of macroeconomics are aggregate demand and aggregate supply of the whole economy. We have provided Introduction to Micro Economics Class 12 Economics MCQs Questions with Answers to help students understand the … Thus, as we move down the PPC from point C to point D, the opportunity cost increases. PPC is concave shaped because of increasing marginal utility, i.e., more and more units of one commodity is sacrificed to gain an additional unit of another commodity. It is also known as transformation curve. © Thus at point c, the opportunity cost of one additional capital good is 4 units of consumer goods. 3,000 the cost of producing rice. Concave down on since is negative. This article consists of MCQ related to the topic “Central Problems of an Economy”. There are other secondary functions that are essential contributors to the efficient performance of production, planning, and control. Redistribution of technology . Download the PDF Question Papers Free for off line practice and view the Solutions online. 6. The graph is concave down on the interval because is negative. we have collected all the data and merged them into one file you will be able to download the … 2.4.6. These three phases as mentioned above make up the main body of functions of PPC. Production Possibility Curve (PPC) is concave to the origin because of the increasing opportunity cost. Increasing MOC/MRT implies (a) Concavity of PPC (b) Consecity of PPC (c) Straight line PPC (d) None of the above. This is because no resource is equally efficient in the production of all goods. Follow up or control phase . So, the possibility within a given economy to produce will … 3,000 and wheat worth Rs. For instance, if we want to produce 2 lakh tons of wheat, we will have to sacrifice 2 thousand machines and so on. This quiz has around twelve questions of the same topic; choose the correct answer. This is shown in Fig. If the country chooses the combination of point M, i.e. Action phase 3. The problem of ‘what to produce and in what quantity: This curve also reflects the problem of ‘what to produce’. Because resources were already being fully utilized. The management utilizes this diagram to plan the perfect proportion of goods to produce to reduce the wastage and cost while maximizing profits. And this causes the concave shape of PPC. It appears from the PPC that any point within the enclosed area OFA, say, P, indicates that resources are underutilised. 5. Explain the central problem 'for whom to produce.'. Thus, the opportunity cost (OC) of wheat will be Rs. On the basis of above schedule we can plot al the coordinates of A, B, C, D, E and F, which show the various combination of two goods, wheat and machines. A. Accordingly, the economy will move higher and closerto initial PPC. This is because it shows the maximum gain of two products used in production. Assume further that the community’s indifference curve (CIC) is convex from origin. It includes both explicit and implicit cost. Share Your PDF File Thus, a problem of choice arises. 232, Block C-3, Janakpuri, New Delhi, Q1 What does concavity of PPC imply a Increasing slope b Decreasing slope c Constant slope d None of these - Economics - Introduction B. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. 4,000, then a rational producer will forgo the production of rice for the sake of wheat. Central problem of an economy arise, because: 6. Therefore, opportunity cost of a factor is also called the transfer earning of the factor or the cost for next best alternative. TOS4. Privacy Policy3. We have discussed so far that for production of extra unit of one commodity, we have to sacrifice some units of another commodity. The PPC or production possibility curve/ frontier is a presumptive depiction of the different conceivable combinations of two goods that can be produced within the given available resource. A en n . Guiding Principle of ‘For whom to Produce’: Ensure that urgent wants of each productive factor are fulfilled to the maximum possible extent. 2) f is decreasing on I if for every x 1, x 2 in I x 1 < x 2 implies f(x 1) > f(x 2). Specifically V.1a implies that toproduce zero output, any input vector in Rn + will do, including the zero vector with zero costs. a. PPC is concave shaped due to increasing MRT i.e. Consequently it leads to healthy India and increasedindividual productivity. This movement is being depicted in the below graph with the help of thearrow from point P. The large scale outflow of foreign capital will lead to a decrease in the availability ofresources, thereby shifting the Production Possibility Curve (PPC) from right to left that isfrom AB to CD as shown in the following diagram. A. 2 Definition Let f be defined on an interval I, (open, closed or neither), we say that: 1) f is increasing on I if for every x 1, x 2 in I x 1 < x 2 implies f(x 1) < f(x 2). Ltd. Download books and chapters from book store. Both these factors will lead to better and efficient utilisation ofexisting resources of an economy. A firm’s average fixed cost is Rs 20 at 6 units of output what will it be at 4 units of output? If new resources are available or if the level of technology is improved through better method of production and better facilities, then the total PPC will shift upward or rightward. 2, we can show other variants of economic problems also. From Figure, it can be noticed that PPC is concave to origin. If the society is able to increase the resources due to the process of growth, new curve GH is formed. It is because the increase in production of one unit of good is accompanied by the sacrifice of units of the other good. In a situation of full employment the economy would move to a point on the PPC. Share Your PPT File, What to Produce, How to Produce and For Whom to Produce. Replace the variable with in … Concave ppc shows increasing opportunity cost Increasing opp cost is created when the production factors used within the production process are homogenous or highly job specific..this means tht a combination of productn factors used to produce a certain product cannot be efficiently used to produce another product. Due to this reason, the country cannot choose any such combination like ‘H’ which lies beyond the PPC. This contains 25 Multiple Choice Questions for Commerce Test: Introduction To Economics - 4 (mcq) to study with solutions a complete question bank. This is shown in Table 2. Resources are limited and these can be put to alternative uses. Hence, we can say that leftward shift ofPPC results in fall in output and resources. If the country uses all of its resources for the production of only Y, then the maximum possible production of Y will be OPO. The bowed-out curve of Figure 2.5 “The Combined Production Possibilities Curve for Alpine Sports” becomes smoother as we include more production facilities. Delhi - 110058. Briefly put (i) Microeconomics is the study of individual economic units like a consumer, a firm (producer) whereas macroeconomics is the study of economy as a whole and its aggregates like national income, total employment, general price level. Here you will find a series of Free MCQ on Central Problems of an Economy for Class 11th. opportunity cost. https://www.zigya.com/share/RUNFTjEyMTEwOTU3. Questions #21-22 are based on a concave (bowed out) production possibility curve (PPC) with environmental quality (EQ) in the horizontal axis and goods and services (G) in the vertical axis. You cannot stop making a unit of butter, and replace it with an equal unit of guns. The rightward shifting of the curve (new curve) shows the growth of resources. Here the point ‘N’ shows OY1 amount of natural rubber (Y) and OXo amount of Paddy (X). Why is a production possibilities curve concave? As we move down along the PPC, to produce each additional unit of GoodX, more and more units of Good Y needs to be sacrificed. (2015) states that the PPC condition implies the (strong) central condition. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. Below is a production possibility curve for clean environment and medical services. We first calculate the first and second derivative of function f f '(x) = 2 a x + b f "(x) = 2 a 2. Combination D. ; if it produces OXO of X and OYO of Y, then it indicates inefficient utilisation of resources. (vi)    Microeconomics explains how resources are allocated and how total production is distributed among cooperating factors of production but macroeconomics explains how productive capacity and national income of a country increase overtime. Unemployment is reduced due to the measures taken by the government. That is, as we move down alongthe PPC, the opportunity cost increases. PPC is concave shaped – PPC is concave shaped because more and more units of one commodity are sacrificed to gain an additional unit of another commodity i.e. Prepared by Commerce teachers outflow of foreign capital on ProductionPossibilities curve of final... 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Thus, the opportunity cost and marginal opportunity cost and marginal opportunity cost OC... No free lunch: c ( y, then a rational producer will forgo production... Goods and services produced secondary functions that are essential contributors to the efficient performance of production the... Mcq related to Commerce syllabus, prepared by Commerce teachers T ’ shows OYO of... Moc ) no society can satisfy all the resources are utilized produc… a to the! Get utilized in fall in output and resources get utilized AF shows fuller utilization of resources from present to! Is positive and concave down on the distribution mix of the other good discuss anything and everything about Economics generation... Some units of consumer goods a unit of good is accompanied by government... Of increased output and income test, past papers, essays, articles and other allied information submitted by like... Becomes concave to the origin with in … Erven et al in Fig ’ OYO!

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