Macroeconomics



Macroeconomics: Production Possibility Frontier

The opportunity cost of producing 25 more units of manufacturing Goods are 25 equivalent units of agriculture and vice versa. The answer will continue to remain same irrespective of the fact that if we are increasing production of goods from zero to 25 or from 75 to 100. As we can observe from the graph, 25 units of manufactured goods can be produced by letting go of 25 units of agriculture.

In activity four, the graph shows the tradeoff between pharmaceutical and Technological goods. Unlike previous graph, the graph is bit more intricate. The opportunity cost increases by ...