The following points highlight the seven applications of Production Possibility Curve (PPC). The applications are: 1. Scarcity 2. Opportunity Cost 3. Specialisation 4. Marginal Decision Making 5. The Irrelevance of Sunk Costs 6. Economic Growth 7. International Trade. Application # 1. Scarcity: Since resources are scarce, only limited quantities of goods and services can be produced. However, resources have alternative [...]
In this article we will discuss about the measurement of opportunity cost. The reader will also be able to learn about whether opportunity cost can ever be zero or not. In truth, the central problem faced by every society is the allocation of scarce resources to satisfy as many wants as possible. The problem arises because of three characteristics of [...]
In this article we will discuss about the optimum use of resources. Production involves the combination of the services of the different factors, as very few economic tasks are performed by one factor alone. Thus, every productive unit, whether it be a factory or a farm or a railway, uses a number of different types of workers and equipment and [...]