Essay 2

Explain how microeconomic and macroeconomic issues may be represented using production possibility curves

Production possibility curve is a curve thats shows the various possible combinations of two goods a country can produce if all its resources are fully utilized. MIcroeconomics is the analysis of the decisions made by individuals and groups, the factors that affect those decisions, and how those decisions effect others. An example of microecomics that may be represented using ppc is opprtunity cost which is the next best alternative forgone.

The country is producing 10 units of T-shirt and 2 unit of Jackets. If the  wants to produce 10 unit of Jackets, it can only afford to produce 4 units of T-shirts. The opprtunity cost of producing 10 unit of Jackets is 6 T-shirts. In other words, the country has to give up producing 6 units of T-shirts to produce 10 unit of Jackets.

The next microeconomy issue that may be represented using ppc is scarcity. Humans have unlimited wants but there is only limited resources. 

At point Z, it is outside the ppc and this point is unattainable because there are not enough resources in that country to produce 10 units of capital good and 6 units of consumer goods

Macroeconomics is focused on the movement and trends in the economy as a whole. An example of macroeconomic is  recession. 

If an economy moves from point A to point B, the economy suffers a recession. Recession causes unemployment. At point P, everyone is employed but at point B, there are some unemployment occurring