LAIVERSTY SERIES

E I
t Das of yaríous alternative
2
sed fo the production
romunsty can be
chose has to be made
between the alternative
can be produced
siTetey are
In aother words, the economy has to choose which HYs
casce,
decided to produce rnOre points representin
what quantíties. f it is possibilities must
produre and in certain other goods has to be curtailed. Let possibility curve AE
that fhe conotny
goods, the can
production of
produCe two commodities, cotton and wheat w We supps goods
it. can neither
For example, the
that the proxductive resources are being fully utilized and there is no charge i
production possibilities because at U the
tehnology The following table gives the various empioying its res
Alternative Production Possibilities resources available
Cotton Wheat The central pro
Production asking the followi
Possibiltities (in '000 quintals) (in "000 quintals)
() What goode
15 (i) How will th
14
1
12
technology
C 2 (ii) How will t
3 make up th
4 5 How much of go
5 upon (a) the exter
capital which it ca
1 all available resources are employed efficiency of thes
for the production of wheat, 15,000 community. Ever
quintals of it can be produced. If, on the quintals)
A help of its resou
other hand, all available resources are 15
B produce more th
utilized for the production of cotton, 5000 combinations of
quintals are produced. These are the two "00012 production of one
extrernes represented by A andF and in (in production possiE
between them are the situations Wheat Q.3. How is F
represented by B, C, D and E. At B, the scarcity, choice a
econony can produce 14,000 quintals of on this curve?
wheat and 1,/000 quintals of cotton. At C, E

the production 3+
pOssibilities
quintals of wheat and 2,000 are 12,000 1
Explain how t
Crtton, as we rmove fron A to quintals of possibilities cur
up orne units of F, we give 4 (a) Movemen
wheat for some units of Cotton (in "000 quintals) possibilit
ctun. Por instance, moving (b) Móvemen
produce 1/00 quintals of from Ato B, we sacrifice 1,000 quintals of wheatto Ans. Productie
sarrife increasing cotton, and so on. As we from A to F. we
amounts
MINYy, ore and more of of cotton. This means that,move problens:
yrodutin of one good can be in a full-employment 1. Scarcity. Sir
Jeture another good. This is obtained only reducing
the
services can be p
ou! in eafe limited. The given due to the
basic fact
by
the economy's one commodity
aove table. figure that
1a thes
fizure, AF is the illustrates production
the possibilities set commodity. In fa
pssbity
se }runtcan product
ier, which shows io n to increase the
nMAy
itycurve is produce the possi
various b ility curve, also called the productin 2. Opportunit
also
itos another,called
with given
a
combi
amount n at ions of the
tw0 goods which
production
certain amount c
ratios or transfo:
%
TArCs iron one use really transformation one
we are
of
resources.when we another
curve, because The movefro gve up some u
to
transformitong remembered
another. It is
be
good into by
that all the
essence of the o