These production possibilities graphs are a graphical representation of the various combination of maximum of output that can be produced from the available resources and technology. Three assumptions that lie behind the curve: full employment, the use of the best technology and the production efficiency. As economy’s production level of any particular item increase, it’s per unit cost of production rise – this is the law of increasing cost. And the technology change plays an important role on the production possibility curve. Two different growth rates of two different economies are emphasis on the output choices by two economies.
Economists see resource as scarce that is not able to produce all goods and services to satisfy everyone. In the face of unlimited wants and limited production resources, choices become a forced necessity. Because of these choices, the decision to produce one thing means that same other thing will not be produced. The value of next best alternatives that is given up as a result of making particular choice – this is opportunity cost.
In our life of limited times in a day, we do make choice to do the worthy and meaningful things. 24 hours a day: 8 hours working, 8 hours sleeping, and 2 hours in transportation, 2 hours cooking and eating and 2 hours using washroom, 2 hours your choice (watching movies, jogging, house cleaning... etc.). One significant opportunity cost I have experiencing by returning school, I give up my part time job for $20 per hours + bonus. In general, I prefer to continue my education and I would like to have a bright future in my career.
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