7 pages Assignment Example | Topics and Well Written Essays - 750 words

7 pages - Assignment Example If people buy a lot of drinks or many tickets are sold, the players’ salary increases. If there are only a few people who buy the tickets or the drinks, the players’ salary decreases. Q.1. When there is underutilization, a country uses fewer resources than those that it can use. The production possibilities frontier is that line on the production possibilities graph which indicates the maximum possible output. Q. 2. The Product Possibilities Curve abbreviated as PPC shows the optimum production level hat economies can attain. For example, if a person compare the main level of production for an economy, with the actual curve, it is possible to determine the economy’s efficiency. Q. 3. Opportunity cost is demonstrated when making a comparison between data on different points on the production possibilities frontier. When the production of an element goes up, the curve on the PPC shows the production curve decreasing. Q. 4. If there is a decrease it does not mean that the production possibilities for farm’s output have decreased. If the decrease in farms was higher than the production possibility then the farm output would increase and vice versa. Q. 6. Certain events such as natural disasters for example, floods and hurricanes are likely to move the PPC down and to the left because there would be a reduction of productivity in the economy since most businesses in operation. Q. 6. Repairing a leaking roof and paying the night security guard are fixed costs because the payment does not change despite the events surrounding the expenses. Cotton, food and electricity at the mill are variable because they always change. Q. 3. Regulations affect the output decisions of producers because it may make it too expensive or cheaper. For example, companies will not continue to supply if the regulations support the expensive