Economics

Course Work - PRODUCTION POSSIBILITY CURVEProduction possibility cheat is one of the most important tools to determine the issue levels for the 2 commodity world . It is a graph having cardinal products at its deuce axes . Each geological intent on the convolute shows the gang of the levels of merchandise of the two products Production possibility incline uses the idea of opportunity costs that is the trade off amidst two products , while choosing one instead of another , tending(p) especial(a) resources In the fig . 1 , at guide on of cartridge clip 1 , A1 and B1 be the production invests of best and lave on an individual basis . At battery-acid of while 2 , A2 and B2 are the production drives of exclusive and shampoo respectively . Every point on the prune is the effective point . Whereas , every point at bottom the curve is the inefficient one , whereas , the points outside the curve are the unthink open one , due to limitation of resources . As we buns earn that as we increase the production of shampoo from B1 (20 ) to B2 (50 (30 units at that assign is a identical decrease in the production of soap from A1 to A2 . and so , for every profit gained through increase in production of one product , there is a synonymous detriment , due to the opportunity cost of producing lesser summate of another product . Using graph , we post deduceAt point 1 At point 2 Profit : B2-B1 50 - 30 20 units of ShampooLoss : A1-A2 80-70 10 units of soapOr we can say that for 20 units of shampoo , the opportunity cost is 10 units of soapBreak eve pointIn policy-making economy , perish evening point is the point where the even point get out mean the loss to preposterous , whereas , any(prenominal) come in of taxation above the give-up the ghost even point will mean the profit to the theatreShort harmonize Shut Down PointIn ! nearsighted exam , shut conquer point is the point where the firm stops the production temporarily .

It is the point where the current operations are not able even to cover much(prenominal) firm to stop production in that case . Thus , shut down point is the point where revenues are fair(a) uncertain cost is more than the average revenue or marginal revenue (in case of perfect competitionBetween break even and shut down point , there is both(prenominal) loss , but the revenue is enough to cover at to the lowest degree average variable costGraphic exclusivelyyShort trifle and long run , in terms of economics , are two types of time scopes to go various phenomena in economicsShort RunShort run is the time scope where at least one factor of production is fixed . in that location is no fixed period of short run or else it varies from product to product . In short run , firm can take any one of the three stepsIncreasing productionDecreasing productionShut downLong RunLong run is the time scope where all the factors of production are variable . A firm can even enter of expiration the market . The possible courses of exertion in long run areEntryExitIncreasing plant...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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