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| 1. |
How can a production possibility curve solve economic problems faced by an economy ? |
| Answer» Production Possibility Curve/ Frontier (PPC/PPF) gives us the maximum quantity of any product that can be generated by limited availability of inputs and current technology level. We decide whether to produce more of output 1 or more of output 2 or both should be prepared equally on the basis of availability of scarce resources and market demand for each output. Hereby, PPC (or PPF) plays a very important role in allocation of output so as to tackle central problems. | |