What are 3 things that production possibilities can explain?
The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions.
What is meant by production possibility?
In business analysis, the production possibility frontier (PPF) is a curve that illustrates the possible quantities that can be produced of two products if both depend upon the same finite resource for their manufacture. PPF also plays a crucial role in economics.
What does a country production possibilities depend on?
A country’s production possibilities curve relies on resources and technology.
What point is best for Alpha?
In practice, 0.01, 0.05, and 0.1 are the most commonly used values for alpha, representing a 1%, 5%, and 10% chance of a Type I error occurring (i.e. rejecting the null hypothesis when it is in fact correct).
How is underutilization depicted on a production possibilities?
Underutilization is shown by any point that appears inside the production possibilities frontier. This law states that as production switches from one item to another (for example, from shoes to watermelons), more and more resources are necessary to increase production of the second item (watermelons).
What does an alpha of 0.05 mean?
The significance level, also denoted as alpha or α, is the probability of rejecting the null hypothesis when it is true. For example, a significance level of 0.05 indicates a 5% risk of concluding that a difference exists when there is no actual difference.
How do you know what alpha level to use?
To get α subtract your confidence level from 1. For example, if you want to be 95 percent confident that your analysis is correct, the alpha level would be 1 – . 95 = 5 percent, assuming you had a one tailed test. For two-tailed tests, divide the alpha level by 2.
How is underutilization depicted on a production possibilities frontier PPF )?
How do you use the production possibilities model?
Use the production possibilities model to distinguish between full employment and situations of idle factors of production and between efficient and inefficient production. Understand specialization and its relationship to the production possibilities model and comparative advantage.
What do you mean by Production Possibility Frontier?
Key Takeaways. In business analysis, the production possibility frontier (PPF) is a curve illustrating the varying amounts of two products that can be produced when both depend on the same finite resources. The PPF demonstrates that the production of one commodity may increase only if the production of the other commodity decreases.
Why is the production possibilities curve bowed out?
The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. Such an allocation implies that the law of increasing opportunity cost will hold.