Suppose that the economy in the Jatinagor area has a Production Possible Limit with the equation X² + 4Y² = 64. Calculate what the value of X is if Y = 0 and what is the value of Y if X = 0 What is the opportunty cost of X if Y is constant in the economy or does it depend on the levels of output produced? Explain!

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Production Possibility Analysis

The production possibility analysis comprises the production possibility frontier (PPF), or the production possibility curve (PPC) to evaluate a society or even an economy. The production possibility curve represents the cost that the society has to incur for choosing between two different commodities. It is assumed that an economy that operates at the highest production possibility curve is known to have a better standard of living which the society can achieve for producing the optimum level of output which it can produce given a specified number of factors of production or inputs or resources.