The paper "Relationship between Unemployment and Inflation Rate" is an outstanding example of a micro and macroeconomic assignment. A production possibility frontier is a locus of a combination of two commodities whose production utilizes the available resources and technology. The curve shows the combinations that can lead to high production and it is upon the nation to decide what to produce so as to attain efficient results. Figure a) Graph showing Production possibility curve. Source; Investopedia 2003 Point x marked on the graph and y shows inefficient production. Point x shows the underutilization of resources whereby the resources are not used to full capacity.
Point y shows unattainable production because it requires more resources than what is available in the economy. Point A, B, C show efficient production because the available resources are used to full capacity for the production of the products. Opportunity cost refers to the value of foregone returns. In this case, the opportunity cost of producing product A is measured by the value of foregone resources for the production of product B. If resources required for the production of product B are foregone and used to produce good A, more of A would be produced than if they were both produced.
For the law of diminishing returns to hold, the extra output of product B declines as more resources are used to produce it. b) figure b) graph showing demand and supply Price supply Pe Demand Quantity Pe is the equilibrium price which shows the price at which the quantity demanded is equal to the quantity supplied. Demand is the quantity that a customer is able as well as willing to buy at a particular price and it is affected by several factors which are: income, preferences of consumers and the price of a commodity.
Supply refers to the amount a seller is willing and able to produce at a particular price. The supply curve is affected by factors such as price, cost of production and the existing government regulations.
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