Q: Explain solutions of central problems through ppc?

Please experts, kindly answer as soon as possible!!!

This topic is covered in our study material. You can refer to the same following the below mentioned path.
Chapter-1 (named as ' Introduction ' )- Lesson-2 (named as ' Central Problems of an Economy and the Concept of Production Possibility Frontier ' )-under the topic ' Central Problems of an Economy '

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u can refer to Page 29 of C.B. Sachdeva if u have.. Or else here is the answer :

(a) What to produce- it is represented by moving along a PPC. Different points on PPC showing diffrnt combinations of 2 goods are the diffrnt choices open to society. It is from these choices that a society has to select one. Thus, the problm of "what to produce" is the problm of chosing between the points (combinations) indicated on the curve.

(b) How to produce- It is the choice of problm of technique of production i.e. labour intensive technique or capital intensive technique. PPC helps to solve this problm. For instance, if the technique used in production is obsolete, the economy will operate at some point not on the PPC but inside it. This will inspire the economy to make change in the technique so as to produce at some point on PPC itself by making efficient use of its resources.

(c) For whom to produce- PPC reflects how this is being solved. If combination of goods being produced shows increase in output of luxury goods than necessary goods, it indicates that the taste of rich people is being preffered to the needs of the poor people. Thus necessary changes can be made.

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i am not satisfied with b) How to produce, because if the technology used in production is obsolete/ depriciates, this is depicted by a leftward shift of ppc(as per the study material) , and not by a point inside ppc!

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