a) Use a production possibilities frontier to describe the idea of trade-off?

A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. Combinations of the output of consumer and capital goods lying inside the PPF happen when there are unemployed resources or when resources are used inefficiently.

The production possibilities frontier shows the productive capabilities of a country. A production possibility curve even shows the ?basic economic problem? of a country having limited resources, facing opportunity costs and scarcity in the economy. Selecting one alternative over another one is known as opportunity cost. Economists use PPF to illustrate the trade-offs that arise from scarcity.

The production possibilities frontier is a concept in the fields of both business analysis and macroeconomics. Within business analysis, the production possibility curve represents the various production levels of two goods requiring one resource that is available in a limited amount.

Meanwhile, within the field of macroeconomics, it's production possibilities frontier shows the situation in which a company is producing goods/services most efficiently to use resources the best possible way, in light of limited production capabilities. This allows the country's limited resources to be allocated most efficiently and completely.

Production Possibility Frontier Assumptions

One of the first and most important things to note is that economists often base their models off of key assumptions; such as "?ceteris paribus?," meaning all else remains the same or all other variables are kept constant. Economists do this in order to isolate a particular relationship, so that other variables do not obscure what they're attempting to discover.

In order to simplify the calculations, the production possibility frontier makes some assumptions that are not true in practice. These assumptions include the following: that the country only produces two goods, that it has a fixed amount of resources, and that it has a static level of technological development. Additionally, the PPF operates on the assumption that there are no inefficiencies interfering with output—that production is as efficient as it could possibly be; it also assumes that one commodity's production must decrease to allow the increased production of another commodity.

Step-by-step explanation

A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. Combinations of the output of consumer and capital goods lying inside the PPF happen when there are unemployed resources or when resources are used inefficiently.