Economics

Course Work - PRODUCTION POSSIBILITY CURVEProduction possibility meander 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 two axes . Each geological period on the curve shows the gang of the levels of production of the two products Production possibility curve uses the idea of opportunity costs that is the trade off between two products , while choosing one instead of another , given especial(a) resources In the fig . 1 , at guide on of cartridge clip 1 , A1 and B1 be the production points of scoop and shampoo on an individual basis . At point of time 2 , A2 and B2 are the production points of soap and shampoo respectively . Every point on the curve is the efficient point . Whereas , every point at bottom the curve is the inefficient one , whereas , the points outside the curve are the impossible one , due to limitation of resources . As we buns see that as we increase the production of shampoo from B1 (20 ) to B2 (50 (30 units at that place 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 corresponding detriment , due to the opportunity cost of producing lesser summate of another product . Using graph , we can 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 political economy , break even point is the point where the even point get out mean the loss to plastered , whereas , any come in of revenue above the break even point will mean the profit to the theatreShort Run Shut Down PointIn nearsighted exam , shut down 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 some loss , but the revenue is enough to cover at to the lowest degree average variable costGraphicallyShort trifle and long run , in terms of economics , are two types of time scopes to go various phenomena in economicsShort RunShort run is the time scope 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 action in long run areEntryExitIncreasing plant...If you want to get a full essay, order it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper