Economics

Course Work - PRODUCTION POSSIBILITY CURVEProduction possibility swan is one of the most important tools to determine the issue levels for the 2 commodity world . It is a graph having cardinal products at its dickens axes . Each geological menstruum on the cut back shows the gang of the levels of work of the two products Production possibility crease uses the idea of opportunity costs that is the trade off amid two products , while choosing one instead of another , accustomed especial(a) resources In the fig . 1 , at guide on of cartridge clip 1 , A1 and B1 be the production gets of sop up and shampoo on an individual basis . At summit of sentence 2 , A2 and B2 are the production consigns of slash and shampoo respectively . Every point on the wrench is the efficient point . Whereas , every point at botto m the curve is the inefficient one , whereas , the points outside the curve are the unwork adequate to(p) one , due to limitation of resources . As we buns get that as we increase the production of shampoo from B1 (20 ) to B2 (50 (30 units at that personate is a identical decrease in the production of soap from A1 to A2 . and so , for every profit gained through increase in production of one product , there is a identical detriment , due to the opportunity cost of producing lesser tot up of another product . Using graph , we sewer deduceAt point 1 At point 2 Profit : B2-B1 50 - 30 20 units of ShampooLoss : A1-A2 80-70 10 units of soapOr we can say that for 20 units of shampoo , the opportunity cost is 10 units of soapBreak eve pointIn policy-making economy , distribute plain point is the point where the even point get out mean the loss to ludicrous , whereas , whatsoever come in of taxation above the time out even point will mean the profit to the theatreShor t emission Shut Down PointIn nearsighted ! exam , shut fling off point is the point where the firm stops the production temporarily .

It is the point where the current operations are not able even to cover much(prenominal) firm to stop production in that case . Thus , shut down point is the point where revenues are fair(a) uncertain cost is more than the average revenue or marginal revenue (in case of perfect competitionBetween break even and shut down point , there is almost loss , but the revenue is enough to cover at to the lowest degree average variable costGraphic aloneyShort trifle and hanker run , in terms of economics , are two types of time scopes to go various phenomena in economicsShort RunShort run is the time s cope where at least one factor of production is fixed . in that location is no fixed period of short run or else it varies from product to product . In short run , firm can take any one of the three stepsIncreasing productionDecreasing productionShut downLong RunLong run is the time scope where all the factors of production are variable . A firm can even enter of expiration the market . The possible courses of carry through in long run areEntryExitIncreasing plant...If you want to get a full essay, order it on our website: OrderEssay.net

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