Introduction to Economics

Question 1\n(a) The takings possibilities frontier is the termination between those combinations of goods and services that throw out be produced and those that can non (McTaggart, Findlay & Parkin, 2007). The PPF comp bes twain products and a model economy is employ where everything covers the same (ceteris paribus), i.e. production follow, demand and supply etc remain the same.\n\nHere is an example of a PPF using two goods, take out and steak. On the x-axis in that location is the fare of milk which can be produced in litres and on the y-axis there is the derive of steak which can be produced in kilograms.\n\nEach spatial relation on the PPF is efficient. It uses all the resources available. any(prenominal) tar view within the compass of the PPF is obtainable, but resources are organism wasted. For example, if there are 10 cows that can both be used for producing milk or steak, and we milk angiotensin converting enzyme and slaughter the other, the other octett e are out on the field eating spate not producing anything, i.e. we could be either milking them or slaughtering them. Any exhibit outside of the PPF is unobtainable, as there are not luxuriant resources available.\n\nThe fringy greet is the cost of producing one more whole of measurement of it. The gradient of the PPF shows the marginal cost. As more steak is produced, the marginal cost of producing milk increases. That is, the more cows that we slaughter, the less milk we are able to produce.\n\nThe marginal upbeat is the get ahead received from overpowering one more unit of it. Marginal benefit is measured by the most that soul is willing to pay for some other unit.\n\nAs all intimates on the PPF are efficient, which one get on the PPF is more authorised than any other? It is the point where the resources are allocated efficiency, that is, we are not trading off another(prenominal) good that we value high than the other. This point is found when the marginal cost is equal to the marginal benefit.\n\nAs we can see, the point of intersection of the marginal benefit and marginal cost shows us the most efficient amount to produce, in this case, 5 units of steak and 20 units of milk.\n\n(b) There are two major influences which affect sparing growth. They are technological form and capital accumulation.\n\nTechnological change is the development of...If you want to get a full essay, graze it on our website:

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