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Discuss any five factors that may cause production possibility frontier (PPF) curve to shift.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter2: Choice In A World Of Scarcity

Section: Chapter Questions

Problem 13RQ: Explain why societies cannot make a choice above their production possibilities frontier and should...

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Welfare Analysis

Welfare analysis of the society is related to welfare economics. From the economic point of view former welfare economics refers to that subject which uses the techniques of microeconomics to analyse and evaluate the welfare at the economic or aggregate level.

Question

1. Discuss any five factors that may cause production possibility frontier (PPF) curve to shift.

Defintion Defintion Curve that represents the graphical relationship between the total supply of goods and services and the price level in the economy. When the price level increases, producers tend to supply more of a product in the market to earn a higher revenue or vice versa.

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Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it.
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What is the axiom of consumer choice that implies that consumers spend all their income in order to maximize utility? and Explain the main assumption behind a concave production possibilities frontier
Efficiency in the production possibilities model Suppose the fictional country of Shenandoah produces only two goods: millet and handbags. The following graph plots Shenandoah's current production possibilities frontier, and includes six different output combinations given by black points (plus symbols) labeled A to F. Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, or unattainable. Check all that apply. Point Inefficient Efficient Unattainable A B C D E F
Please graph two hypothetical production possibilities models. In one of the graphs, please construct a frontier with the two variables having a constant rate of change. In the other draw the constraint with the two goods or services having a varied rate of change. What would make the frontier linear or nonlinear?
5. Explain (with a picture) what is meant by the production possibility curve.
Assume an economy that produces two goods experiences technological improvements in the production of one of its categories of goods. Using the ONE correct diagram aattached, discuss in terms of the production possibility frontier the economic impact of the technological improvement for this economy. Include in your answer the meaning of the production possibility frontier.
Production possibility frontiers are thought to be concave from the origin (bowed out) because: A. of the different intensities with which commodities and services are used in producing capital, land, and labor. B. land, labor, and capital are used in fixed proportions in producing all commodities and services. C. of the different intensities of people's labor efforts. D. all productive resources are equally suited for producing all goods. E. productive resources differ in their suitability for producing different goods.
9 The individual production points on each person's production possibilities frontier represent their _____. A. final endowment B. initial endowment C. initial potential D. endowment final potential
Which of the following are the assumptions of the production possibility curve? a. Two goods are produced by the economy b. Technology and skills available are constant c. All of the options d. Resources available are constant in the economy
Using an appropriate diagram, explain how the production possibility frontier becomes a model of scarcity, choice and opportunity cost.