00:01
So here we are asked to draw a production possibilities curve that is concave to the origin, right? so a production possibilities curve is a diagram that shows the opportunities available to society.
00:13
And when we say concave in every white day language, we mean it's sort of bulging out, right? so it's saying that, for example, this economy could produce 90 y and 25x or by allocating the resources of this society differently.
00:30
This society could maybe produce 70x and 50y.
00:35
It's showing you the choices of what the society can produce, not what the society can buy with money, but what the society can produce by putting its people and its machines to different jobs.
00:45
So here let's go through these, a supply and demand.
00:50
This has got absolutely nothing to do with supply or demand, right? it's talking about production, right? strictly how much we're capable of producing.
01:02
If you were stuck on a desert island picking coconuts, you wouldn't be talking about the demand of coconuts or the supply of coconuts.
01:09
They're the same thing for you.
01:10
You're the only person, right? this is thinking about how much society can produce between two different alternatives, right? so again, in b, demand is unrelated.
01:28
There's just nothing to do with demand in a production possibilities curve, right? the key thing about the production possibilities curve is that any point here, right, is giving you a slope.
01:40
And the slope is equal to the tradeoff, right? as you move up and down this line, you are giving up different quantities of x for y, right? the slope is telling you if you get a little bit more x or y, how much y do you have to give up? so again, c and e are more of the same...