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I selected the topic regarding production especially production possibilities frontier or the PPF. Actually I decided to study two topics; the other one is the supply and demand because I think these topics are interrelated to one another. But first let me discuss first the PPF.According to the online tutorial site of Ted Black, production possibilities frontier is another economic tool that is being used in order to determine the maximum output that a certain market could produce. Basically, PPF depicts the production level of the economy. By seemingly giving us a curve, we could now determine what is “optimal” in the society and in theory what is the ideal set up of the market. By this we could easily see the discrepancy between theory and reality. The lecture clearly stated that those production level beyond the PPF is not realistic, meaning it is not attainable by the economy due to the limited available resources that can be utilized by the economy for production to meet the demand of the society or market; and those production levels that are below the PPF are those inefficient productions that were not fully use the potential resources to produce goods and services. Meaning, there is something in the process that causes for the market to perform inefficient like government distortions and other economic agents that causes negative externalities in the production performance of the economy. Let us say that, an economy could optimally produce 10 perfumes but in reality it is not 10 perfumes that is being produced but less that the optimal value like 9 or 8 perfumes, by this we could clearly see that the economy lost 2 perfumes from the conduct of the production.With regards to the activities recommended by the tutorial, I have successfully carried them out. What I have learned in addition from the tutorial is that there is a corresponding opportunity costs of shifting a production level to another since the slope of the points in the PPF corresponds to the opportunity costs of the shifting action.The next topic that I studied is the supply and demand which I have said I while ago has relationship with the PPF. What basically were discussed in the tutorial was there are a lot of factors that contributes for the supply [production] of goods and service in the market as well as the demand for these supplies. One of the factors could be which I said is the government interventions like tax. Tax is being treated as part of the costs of producing the goods or services. With the imposition of the government of taxes, the operational expense of the producers increases and in order for their profit not to be affected, what they do is to pass these taxes to the consumers by increasing the prices of their goods and services. By this, they could still maintain the level of profit that they are receiving from operating in the market. This situation clearly gives us what happens on reality. Most of the case, large multi-national corporation that has large market influence passes the tax burden to the consumers through increasing the prices of their products; well this is based on the assumption that the price elasticity of the good is inelastic (Schenk, 2007).Now, it is also shown on the graphs provided by the tutorial the scenario wherein the behavior of the consumer is now a factor to determine the supply. It was depicted in the graph that a decline in the demand of consumers for a certain good or services would impose pressures for the prices of that good or services to decrease in order for the producers to attract the customers. This lowering of the prices is just a “compromise” of the producers to the consumers’ “willingness to pay”. Well, in reality this happens, if you were a rational producer and experiencing a decline in the demand for your products then, in order for you to keep your current customers and attract others is to lower the prices until the demand for your goods increase again. There are some instances that the increase of the demand of the consumers is being ride upon of the producers by producing more. By this, the economy would now trade more goods thus giving way for the market to grow. This is how our markets performs and works hand in hand in order to “cure” itself from market turmoil.

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