Other Goods & Services
Other Goods & Services
Question 1

A
A
B
B

PPF
PPF

Other Goods & Services

Other Goods & Services

Pollution control Goods &Services

Pollution control Goods &Services

MC
MC

MB
MB

Pollution control Goods &Services

Pollution control Goods &Services

b) At point A, pollution control goods and services and other goods and services is attainable but inefficient. At that point, the resources are wasted and misallocated. We can produce more of either goods or both goods at such points like that.
At point B, pollution control goods and services and other goods and services is attainable and efficient because at that point, resources are used efficiency and we cannot produce more good without producing less of some other good.

c) The point of allocative efficiency is the point on the PPF curve at which marginal benefit (MB) equals marginal cost (MC) . The point determined by the quantity at which the marginal benefit curve intersect marginal cost curve. At the allocative efficiency point, we cannot produce more of any good without giving up some other good that we have value more highly. The greater quantity of pollution control goods and services produce, the smaller benefit from pollution control goods and services. But the greater the quantity of pollution control goods and services produced the greater marginal it gets. When marginal benefit equal marginal cost (MB=MC), resources are being used efficiently. ( For example in this question is point B)
Other Goods & Services

Other Goods & Services

d)

a a N
N

M
M

PPF1

PPF1

PPF
PPF

y y x x Pollution control Goods &Services

Pollution control Goods &Services

Technological change is the development of new goods and of better way of producing goods and services.