00:01
We're going to draw a production possibilities graph for the given data.
00:12
So this is our production possibilities curve.
00:20
We're going to put one good on one axis and the other good on the other.
00:27
These data points show the possible combinations of goods that can be produced using resources effectively.
00:37
And basically shows the maximum combination of both of the goods that we can produce at each point with our given resources.
00:49
So we have zero trucks and 60 cars.
01:33
So at a, we have zero trucks, we have 60 cars.
01:58
So this is going to be point a.
02:01
Then for b, we have 20 trucks and 52 cars.
02:14
So this is going to be point b.
02:19
Point c, we have 28 trucks and 49 cars.
02:39
So, here we have point c.
02:43
Then for d, we have 35 trucks, 43 cars.
02:57
E, we have 40 trucks, 35 cars.
03:07
For f, we have 43 trucks, 25 cars.
03:18
And then for g, we have 50 trucks and zero cars.
03:29
Then, if we connect these, you can see that we have a curve that goes outward.
04:05
What is the problem with ford producing a combination? a.
04:10
So the problem is that only cars are being produced.
04:21
An economy operates more efficiently by producing a mix of the two goods.
04:28
Every resource is better suited to producing one good over the other.
04:34
And the economy does best when it directs the production of each resource towards its specialty.
05:15
So it is an ideal if we do not produce any trucks and only focus on producing cars or produce only trucks and no cars.
05:38
So we're going to plot the combination with 30 cars and 40 trucks.
05:50
This is labeled point m.
05:54
The combination with 40 cars of 50 trucks is labeled point s.
06:04
So let's go over what's happening at these points.
06:13
So at point m there are some resources that are not being used for production.
06:25
So we have inefficient use of resources.
06:29
This is not ideal.
06:35
We have resources left over to produce these two goods, but these are not being used.
06:42
Then we have point s.
06:46
This is outside of the production possibilities curve.
07:11
We cannot achieve this with our current level of resources.
07:29
We're going to explain how we can see the given terms on the graph...