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18. For feasible curve 1, which bundle will be chosen? For feasible curve 2, which bundle will be chosen? wheat B A cosh

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Answer #1

The production possibility curve (PPC) shows all the combinations of two goods (here wheat and corn) which can be produced in an economy with the given amount of resources. It is also called producion possibiliy frontier (PPF) and it represents tradeoff between the two goods. A point on the PPC are efficient bundles, points in the interior of the PPC are inefficient bundles, and points beyond the PPC are unattainable bundles.

For PPC 1, only bundle A is efficient and the bundles B, C and D are all beyound PPC 1, so they are unattainable. For PPC 2, bundles A and B are in the interior of the PPC, so they are ineffcient. Bundle C lies on the PPC 2, so it is efficient. Bundle D lies beyond PPC 2, so it is unattainable.

So, for feasible curve 1, we will choose bundle A and for feasible curve 2, we will chosose bundle C.

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