00:01
So we're going to be looking here at production possibility frontiers.
00:07
So we need to draw and explain the production possibility frontier for an economy that produces cheese and milk.
00:14
What happens to the frontier if a disease kills half of the economy's cows? quite an interesting scenario here.
00:21
Use the production possibility frontier to describe the idea of efficiency.
00:25
Okay, so production possibility frontier simply shows us the trade -off in an economy because resources are scarce.
00:39
So because resources are scarce, this economy can only produce cheese and milk.
00:47
So the production possibility frontier can only be determined by the trade -off between this, and we can use a different color to look at how the pf can look like.
01:02
So this basically would be the original ppf.
01:07
Now let the green color show the change after the economy loses half of the cows.
01:16
What's going to happen is going to be a negative shift.
01:21
It's going to be a negative shift of the ppf.
01:27
Now, obviously, this means that the trade -off between cheese and milk is now based on less resources than it had previously.
01:39
So the blue was the original and the green is the change after losing the factors of production, which is the cows have been lost.
01:49
And the second part of the question obviously looks at efficiency.
01:55
So the question is we need to look at how do we explain efficiency using the ppf? okay, so there's two types of efficiency we can mention.
02:06
The first one is allocative efficiency...