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In microeconomics, a production–possibility frontier (PPF), production possibility curve (PPC), or production possibility boundary (PPB) is a graphical representation showing all the possible options of output for two that can be produced using all factors of production, where the given resources are fully and efficiently utilized per unit time.
The law also applies to switching production in a maxed out economy. Essentially, the economy is still producing more, so the law still applies. The only difference is that resources are being taken from one area and applied to another, instead of simply producing more of the same (as assumed in the first paragraph) [1] Business and economics ...
A curve of output against input. The areas of increasing, diminishing and negative returns are identified at points along the curve. There is also a point of maximum yield which is the point on the curve where producing another unit of output becomes inefficient and unproductive.
The production possibilities frontier (PPF) for guns versus butter. Points like X that are outside the PPF are impossible to achieve. Points such as B, C, and D illustrate the trade-off between guns and butter: at these levels of production, producing more of one requires producing less of the other.
The graph depicts an increase (that is, right-shift) in demand from D 1 to D 2 along with the consequent increase in price and quantity required to reach a new equilibrium point on the supply curve (S). A common and specific example is the supply-and-demand graph shown at right.
Stated otherwise, LRMC is the minimum increase in total cost associated with an increase of one unit of output when all inputs are variable. [6] The long-run marginal cost curve is shaped by returns to scale, a long-run concept, rather than the law of diminishing marginal returns, which is a short-run concept. The long-run marginal cost curve ...
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When the supply curve shifts from S1 to S2, the equilibrium price decreases from P1 to P2, and an increase in quantity demanded from Q1 to Q2 is induced.. In economics, induced demand – related to latent demand and generated demand [1] – is the phenomenon whereby an increase in supply results in a decline in price and an increase in consumption.