4  Illustration Of Production Possibilty CurvePPC Mod

4 Illustration Of Production Possibilty CurvePPC Mod

Hi. Just as I promised in the last video, I’ll
be showing you a graphical illustration of PPC. Just as you can see on the graph , there
are three different points on the graph. The points inside the graph , points P, Q and R,
indicate that there is inefficient allocation of scarce resources , I mean the available
productive resources of a country that are not efficiently utilized , that’s what the
points mean. P, Q and R show that that resources are not efficiently allocated and it also means
unemployment of resources. That’s a point inside the graph as you can see on the graph.
Then we have the points on the boundary. Points A, B and C. Now points A ,B and C on the boundary
show that that is the maximum point any country can reach, considering the use of their resources
and the technology level that they have , So that’s the boundary . So point A, B, C shows
that when you combine your resources efficiently, and you make best use of your technology,
you will attain the boundary, which is called Production Possibility Boundary. Now, there is another point outside or beyond
the boundary, just as is seen, point Z. Point Z , I used point Z, because Z is the last letter
in the alphabet . Now that point Z is indicating unattainable level of production or a level
where production is not feasible . A level where production is not feasible. Now
this level that is not attainable can actually be attained if there is one of these two conditions.
What’s the first one? Economic growth. Now when there is an economic growth, it indicates
an expansion in the production capacity of a country, so thereby, making them to get
to the boundary, which is the maximum point and exceeding the boundary. So, technology,
good technology, can actually make a country get to the unattainable level, meaning improvement
in production techniques or economic growth just as China is the fastest growing economy
in the world. Now what’s responsible for that? They are
able to utilise their resources efficiently and having gotten technology, they are able
to also attain the level where production is not feasible, that is seen on the graph,
that’s that about that on the graph. That’s that about that on the graph. In our next video, I will be showing you the various methods of of solving economic problems. I mean contemporary economic problems. That will be done in our next video. As well as the differences and similarities between economics and other science subjects.


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