00:01
Hello, in this question we are supposed to draw the production possibility frontier for two commodities that is wheat and barley.
00:10
We are given various points.
00:13
The point a is 0 ,20 point b is 1 ,15 point c is 2 ,10 point d is 3 ,5 and point e is 4 ,0.
00:29
So, let's plot these points on a graph.
00:38
Let's draw the y -axis.
00:42
This is our y -axis.
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This will be our x -axis.
00:49
So, here let's say we plot wheat.
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Here let's say we plot barley.
00:57
Now, here let's say this is unit 1 ,3 ,4.
01:04
Similarly, here we plot 5 ,10 ,15 ,20.
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Now we are going to plot the points.
01:15
So, the point a was 0 ,20 point b was 1 ,15 point c was 2 ,10 point d was 3 ,5.
01:27
Similarly, point e was 4 ,0.
01:32
Now, joining these two points, all these points we get a straight line.
01:46
The next question asks us about the shape of the ppf.
01:51
The shape is a straight line because the slope of the curve that is change in y over change in x.
02:12
That is the change in per unit of barley that you have to sacrifice over the gain in wheat.
02:20
So, here understand that to increase, have one more unit of wheat, you have to sacrifice five units of barley.
02:27
Similarly, here as well for gaining one additional unit of wheat, you have to sacrifice five units of barley.
02:35
Similarly, to gain another unit, you have to sacrifice five units of barley.
02:39
So, each time you are sacrificing the same amount.
02:42
So, this value will be a constant.
02:45
So, there is constant returns to scale.
02:48
That's why the shape is a straight line.
02:52
Further, moving on to the next question, it asks us about comparative advantage.
03:03
So, what is comparative advantage? the comparative advantage is ability to produce a particular good or service lower opportunity cost than other trading partner.
03:49
So, if a trade opportunity cost for some country a is less than some country b.
03:57
So, for example, if there are two countries a and b, an opportunity cost of production of x is less in this country, then a will produce commodity x.
04:18
Moving on to the next question.
04:22
Next question asks us about role of agriculture in south african economy.
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The first is availability of food.
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Agriculture provides availability of food.
04:47
Second is employment.
04:53
Being a primary sector in the economy, it provides employment to many people.
05:01
Third is production of raw materials for industries...