resources are used for the production of a product can not be used simultaneously with the release of another.Due to the fact that producing articles involved X means which could be used for the creation of products Y, the increase in some products would entail reducing the number of the other.This reflects the economic constraints - the production possibility frontier in particular.Next, consider the limit in more detail.
General
If the unit price for the release of X is required to give up the production of a certain amount of product Y, then the latter will determine the cost of missed opportunities of manufacturing the first or the opportunity cost.But in any economic system are not only the specified types of goods, but also many others.In this connection, the opportunity cost given by the total units - money.
production possibility frontier: the schedule
At each point of the line AE reflected how much the goods X and Y can be created with the use of limited funds in full.This line - production possibilities curve.If all funds are used for the manufacture of the first product, then it will be released E units, and any unit - the second.At point A, all resources will be focused on the production of the product Y, and X is not created.In all other areas we need to make a choice.It should determine how much to produce goods X by eliminating the manufacturing of a volume of Y. Each point of the line AE represents all permissible ratio issue by using all available resources to the fullest.Points that are located inside it indicates underutilization of available resources.Everything that is outside the boundaries of the production capacity in the economy is considered to be unattainable for a given amount of resources.
Clarifying concepts
production possibilities curve reflect four fundamental position.She points to the limited resources, the need to make a choice, the availability of cost of missed opportunities and increase with an increase in output of goods.When driving on the border opportunities right and down, changing thus the industrial structure in favor of increasing the number of product X, increases the amount of product Y, from which you want to refuse.The decision on how to make it, aims to achieve a commodity or technological efficiency - creating products the cheapest method.Implementations consumer problem - answer the question "for whom to produce" and "how to allocate the products" - requires the optimum ratio of return on equity and distribution.The latter is considered to be achieved when the means of redistribution is impossible to improve the well-being of one individual without reducing the quality of life of another.This principle is called Pareto efficient.From the distribution principles used, the size of the remuneration for participation in the production process depends on:
- motivation of business activity;
- degree and supply of labor productivity.
problem of justice
It comes along with the issue of allocative efficiency in the process of solving the problem of consumers.On this issue there are two opinions.The first view suggests that as the basis of justice, equality advocates.We are talking about a situation in which all the profits and the entire production volume is distributed equally in society.According to another opinion, the distribution can be considered fair when the conditions are met privately owned, and there is no gender and racial discrimination.This situation contributes to the formation of equality of opportunity, equality is more important profits.However, in this case, a low income do not have ownership of and able-bodied members of society also have to recognize the "fair."
problem of insufficient funds
Given the above, it can be concluded that the production possibility frontier - this is the limit at which it becomes necessary to choose.This issue, in fact, is a competition between alternative objectives use of scarce resources.By and large, economic constraints - the production possibility frontier, lack of funds - are the main problem of the economic sphere.Achieving efficiency in the use of assets contributes to decision-making about which goods and services, how much it cost to produce to meet different needs.In this issue are two aspects:
1. Production efficiency, that allows you to determine how to produce goods.
2. Productivity in the distribution of solving the problem, for whom and how much to produce.
law of increasing opportunity cost
He is considered one of the fundamental system of management.The production possibility frontier shows that with the release of each additional product there is a tendency of increasing opportunity cost.The effect of this law is due to the impossibility of absolute interchangeability tools.The production possibility frontier points to the heterogeneity of the assets.Not all tools can be equally easy to switch from one product release to another manufacturer.
Possible solutions
above described factors that indicate the production possibility frontier.The economic sense of entrepreneurship is an effort to meet the needs of society with maximum profit.However, in a constantly evolving market conditions raises the question: "Can move the production possibility frontier?" It is quite real.The production possibility frontier can be higher, provided:
1. increase the resources available to the country.
2. Improving production technologies.
3. Improvements of economic organization.
4. Attracting people to hard labor.
All of these methods have certain names:
- extensive methods.It provides for the expansion of resources.
- intensive methods.Its schedule includes a better use of assets.
- non-economic methods.It is based on the formation of overly strenuous work environment without considering the interests and will of the people.This method could eventually lead to the complete destruction of the labor of assets that are available in society.This, in turn, contribute to the fact that the production possibility frontier will again below.
absolute asset utilization
In economic mode, full-time all parts of possible combinations of manufacturing two products are located at the border of production capabilities.If all society will spend on the creation of consumer goods, it can get the maximum capacity, thus completely abandoning of leisure.If you use the same resource and technology to achieve the maximum possible return results.In the latter case, the society will exist solely leisure industry.Between these extremes there are a large number of combinations of resource allocation in one and in the second branch.At any point to make more than one item, without affecting the amount of the issue of another, you can not.The number of consumer products and the scope of leisure are not only alternative, but also act as interchangeable within the scarce resources.
Conclusion
Society, which is under consideration at the maximum limit of the production due to the lack of assets, can not simultaneously increase the volume of output of consumer goods and services industry.This object is achieved in terms of economic growth.In the case of partial capacity utilization or unemployment at different combinations of options release of the goods are not placed on the line transformation, and inside it.This indicates that when using additional assets can increase production in both the areas considered.
In conclusion
In the innovation economy neoclassical traditional research methods of production processes are inappropriate for the simple reason that the concept of work and leisure have a rather blurred outlines.In this regard, as a priority science should serve the improvement of existing and development of new models for the formation of the labor market is logically coherent, holistic concept.It should reflect the trends in the development of innovative economy of the modern type.It should, first of all, to take into account the changes that occur in the needs of society.It is about achieving the satisfaction of material needs, and highlighting the social needs, the pursuit of self-realization and self-expression of the individual.As a result of these transformations begin to take on greater importance non-monetary aspects of the relationship in the labor market.These include first of all the conditions and job content, opportunities for professional development, creative self-realization of employees in the manufacturing process.All this has a significant impact on the volume of output, motivations that drive entrepreneurs, forcing them to improve processes, introduce innovative enterprise development program.All this, in turn, contributes to the expansion of productive capacity and economic system transition to a qualitatively new level.
