Answer to Question #187734 in Economics for Tyler Machado

Question

The purpose of the production possibilities frontier (PLF) is to.

Answer 1

Society seeks to effectively use limited economic resources, i.e. wants to receive the maximum amount of benefits produced from limited resources. For this, society must provide full employment as well as a full production. Full employment refers to the use of all types of economic resources, i.e. arable land should not be empty, capital equipment should not be idle, all workers should be busy. The total volume of production is understood as the efficient allocation of resources, i.e. using the resources used in such a way that they give the most valuable contribution to the volume of production. To assess the problem of savings, some assumptions should be made: Efficiency. The economy operates at full employment and full production is achieved. Economic efficiency is the ability of a system to create an economic effect when operating; The amount of resources is constant. The existing factors of production are always constant in quantity and quality; Unchanging technology. Constant application of the same technology; Two products. The economy produces only two products: consumer goods and means of production (books and computers). Production capacity is the maximum number of goods and services that can be simultaneously produced in a given period with existing resources and technologies.