Consider the following statements and choose the correct option: Statement 1: The Production Possibility Frontier (PPF) shows the trade-offs and opportunity costs faced by an economy. Statement 2: The PPF is used to estimate the government's total revenue and expenditure.
Only Statement 1 is correct
Statement 1 – Correct: The PPF (or Production Possibility Curve) shows the maximum combinations of two goods an economy can produce given its resources and technology. Movement along the curve illustrates the trade-off between the two goods, and the slope captures the opportunity cost of producing more of one good in terms of the other.
Statement 2 – Incorrect: Government revenue and expenditure are estimated through the Union Budget and fiscal accounting frameworks, not the PPF. The PPF is a microeconomic production concept, unrelated to budget projections.
Hence only Statement 1 is correct.
Similar Questions
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Important Questions from Microeconomics
Which of the following statement is correct?
I. Indifference curves are sloping from left to right.
II. Higher indifference curve gives a higher level of utility.
If in a production process, all inputs are tripled, which of the following statements follows?
I. If the output is tripled, then decreasing returns to scale apply.
II. When the output is doubled, constant returns to scale apply.
III. If the output is more than tripled, then increasing returns to scale apply.
A market, in which there are a large number of firms, homogeneous product, infinite elasticity of demand for an individual firm and no control over price by firms, is termed as________.
If the two goods are substituted, then the indifference curve will be:
Arrange the following market structures in the increasing order of pricing power to firms.
(A) Monopolistic competition
(B) Perfect competition
(C) Duopoly
(D) Monopoly
(E) Oligopoly
Choose the correct answer from the options given below:
