Assignment on Micro-Economics
Md. Ridwan Reza
Department of Business Administration
Rahat Sarwat Md. Sal Sabil ID: 1001010143 Md. Saddam Hussain ID: 1001010101 Adnan Islam ID: 1001010144 Syed Shaker Ahmed ID: 1001010125 Md. Lahinur Rahman ID: 1001010129
Date of Submission:
Question No: 3
Define each of the following terms carefully and give examples: PPF,scarcity, productive efficiency,inputs,outputs.
Production possibility frontier (PPF): PPF shows the maximum quantity of goods that can be efficiently produced by an economy,given its technological knowledge and the quantity of available inputs. For example: If the choice is reduced to two goods,guns and butter.Points outside the PPF are unattainable.Points inside it are inefficient since resources are not being fully employed, resources are not being used properly or outdated production techniques are being utilized.
Scarcity: The distinguishing characteristic of an economic good.That an economic good is scarce means not that it is rare but only that it is not freely available for the taking. To obtain such a good, one must either produce it or offer other economic goods in exchange. For example: Gas, coal etc.
Productive efficiency: A situation in which an economy cannot produce more of one good without producing less of another good;this implies that the economy is on its PPF. For example: If we produce more butter without reducing gun production.
Inputs: Inputs are commodities or services that are used to produce goods and services. An economy uses its existing technology to combine inputs to produce outputs. For example: Consider the production of Pizza, we say that the eggs, flour, heat, oven and skilled chef are the inputs.
Outputs: Outputs are the various useful goods or services that result from the production process and are either consumed or employed in further production. For example: Consider the production of Pizza, we say that the tasty Pizza is the output.
Question No: 5
Assume that Econoland produces haircuts and shirts with inputs of labor. Econoland has 1000 hours of labor available. A haircut requires [pic]hours of labor, while a shirt requires 5 hours of labor. Construct Econoland’s production-possibility frontier.
Alternative production possibilities
|Possibilities |Haircuts |Shirts (units) | | |(units) | | |A |2000 (1000hrs) |0 | |B |1600(800 hrs) |40 | |C |1200(600 hrs) |80 | |D |800(400 hrs) |120 | |E |400(200 hrs) |180 | |F |0(0 hrs) |200 |
Based on this chart we can represent alternative production possibilities more vividly in the diagram shown in figure.
400 800 1200 1600 2000 (Haircut)
In the above graph we illustrate the alternative production possibilities .between two products haircuts and shirts. When econoland use more houses in haircuts than shirts production decreased. As well as if decrease use of hours in haircuts than increased shirts...
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