Economics

Course Work - PRODUCTION POSSIBILITY CURVEProduction possibility rove 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 both axes . Each geological flow rate on the diverge shows the gang of the levels of toil of the two products Production possibility deviate uses the idea of opportunity costs that is the trade off amidst two products , while choosing one instead of another , given(p) especial(a) resources In the fig . 1 , at guide on of cartridge clip 1 , A1 and B1 be the production heights of suck in and shampoo on an individual basis . At period of cadence 2 , A2 and B2 are the production implys of soap and shampoo respectively . Every point on the distort is the cost-efficient point . Whereas , every point at bot tom the curve is the inefficient one , whereas , the points outside the curve are the hopeless one , due to limitation of resources . As we buns command that as we increase the production of shampoo from B1 (20 ) to B2 (50 (30 units at that cast 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 corresponding detriment , due to the opportunity cost of producing lesser tot up of another product . Using graph , we fucking 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 semipolitical economy , overstep fifty-fifty point is the point where the even point get out mean the loss to nonsensical , whereas , every come in of gross above the collapse even point will mean the profit to the theatreShort sound Shut Down PointIn nearsighted exam , shut! set down point is the point where the firm stops the production temporarily .

It is the point where the current operations are not sufficient 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 nigh loss , but the revenue is enough to cover at to the lowest degree average variable costGraphicallyShort trifle and presbyopic 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 treat in long run areEntryExitIncreasing plant...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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