Study Point

 Whether Economy will always operate on PPF * The exact point of operation depends on how well the resources of economy are used. 1. Economy will operate on PPF only when resources are fully and efficiently utilised. 2. Economy will operate at any point inside PPF if resources are not fully and efficiently utilised. 3. Economy cannot operate at any point outside PPF as it is unattainable with the available productive capacity. It means: Economy can either operate on PPF or inside PPF, known as 'Attainable Combinations'. • But, economy cannot operate outside PPF, known as 'Unattainable Combinations'. Attainable Combinations:  It refers to those combinations at which economy can operate. There can be two attainable options: 1. Optimum utilisation of resources: If the resources are used in the best possible manner, then economy will operate at any point (like, A, B, C or D) on PPF. Why MRT is increases It is assumed that no resourse is equally efficient in production of ...