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Yogita Ingle 5 years, 10 months ago
- The Short Run: In this scenario, at least 1 of the factors – either labour or capital – cannot be diversified, hence, remains constant. In order to differ the level of output, the enterprise can differ only the other factor. The factor that remains constant (fixed) is known as the fixed factor and the other factor which the enterprise can vary is known as the variable factor.
- The Long Run: In this scenario, all factors of production can be diversified or varied. An enterprise in order to manufacture different degrees of output in the long run may differ both the inputs concurrently. Hence, in the long run, there is no fixed factor.
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Yogita Ingle 5 years, 10 months ago
The production possibility curve is based on the following Assumptions:
(1) Only two goods X (consumer goods) and Y (capital goods) are produced in different proportions in the economy.
(2) The same resources can be used to produce either or both of the two goods and can be shifted freely between them.
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Yogita Ingle 5 years, 10 months ago
Correlation is a statistical tool which studies the relationship between two variables e.g. change in price leads to change in quantity demanded.
Correlation studies and measures the direction and intensity of relationship among variables. It measures co-variation not causation. It does not imply cause and effect relation.
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Shivam Gupta 5 years, 10 months ago
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