Explain the production possibilities frontier. What are the main assumptions?
The PPF is used to better understand the basic economic problems of scarcity and choice. Scarcity is the most basic of problems. But, given the scarcity of financial resources that we face, we must ponder choices.
We use the production possibilities frontier to help us understand in an economic context the constraints caused by scarcity and the resulting choices. If you are taking microeconomics, choice will often be described in terms of the individual's or firm's decision. In macroeconomics, choice has a broader ...
The solution goes into a great amount of dept related to production possibilities frontier (ppf). The solution talks about efficiency, fixed technology and other such concepts in order to explain ppf. Solution is very well written and excellent for anyone who wants to get a good understanding of the ppf. Overall, an excellent response.