Economics · The basic economic problem. The idea in plain words, the rules to remember, the mistake to avoid and a worked example, written and checked by Mega Lecture.
A production possibility curve shows the maximum combinations of two goods that an economy can produce when all its resources are fully and efficiently used. One good is on each axis.
A point on the curve means resources are fully used. A point inside the curve means some resources are unemployed or used inefficiently. A point outside the curve cannot be reached with present resources and technology.
Moving along the curve gives more of one good and less of the other, so the movement shows opportunity cost. A shift of the whole curve outwards shows economic growth: the economy can now make more of both goods. An inward shift shows a loss of productive capacity.
Moving from a point inside the curve to a point on it is not a shift of the curve. It only uses resources that were idle; the curve shifts only when the quantity or quality of resources changes.
Answer: 15 thousand computers, which is 1.5 computers for each extra car.
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