00:04
The two initial assumptions made when looking at the ppf production possibilities frontier are, one is resources are fixed.
00:20
Ppf assumes a fixed quantity of resources available for production.
00:25
And, second is, technology is constant.
00:35
Ppf assumes that technology and production techniques remain unchanged.
00:42
And, fourth, b, so in the graph, point a represents an inefficient use of resources.
00:56
It's inside the ppf indicating that resources are not fully utilized, resulting in low production level than what's possible.
01:09
And, point c represents a point on the ppf.
01:15
It signifies an efficient allocation of resources where all resources are fully utilized and it is producing a combination of goods that maximize output.
01:29
B, the opportunity cost of moving from point b to point d is calculated as the change in the quantity of plants given up divided by the change in the quantity of butter, which is gain.
01:56
This would be 7 minus 11 divided by 7 minus 4, which is minus 4 divided by 3.
02:09
Since the opportunity cost is negative, it implies that by moving from point b to point d, the consumers are giving up fewer plants for every additional unit of butter gain.
02:20
This is a good move for consumers as they gain more butter while sacrificing fewer plants.
02:28
For d, an upward shift of the ppf represents an increase in production possibilities with more space for production activities and resources...