Answered: Give a specific example of what would…

Give a specific example of what would cause the PPF to shift outward. Give a specific example of what would cause an economy to move from a point inside the PPF to a point on the PPF.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter2: Production Possibilities Frontier Framework

Section: Chapter Questions

Problem 3QP

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Give a specific example of what would cause the PPF to shift outward.

Give a specific example of what would cause an economy to move from a point inside the PPF to a point on the PPF.

Definition Definition Curve that represents the various combinations of production possibilities of two commodities when resources or factors of production are given.

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Production possibility frontier is also known as production possibility curve or production transformation curve.

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Give a definition of an advance in technology. Suppose that you are drawing a PPF for civilian goods and military goods, describe the effect on the PPF of an advance in technology in both civilian goods and military goods. How would the impact on the PPF be different if the technological improvement only helped in the production of military goods, but not civilian goods?
Before the first Gulf War, Kuwait had the capacity to produce a certain amount of oil from its oil wells. After the war, it found that capacity greatly diminished because the oil wells were on fire. Draw Kuwait's PPF before and after the war, assuming that the only two goods produced are oil and food. Further assume that setting the oil wells on fire did not affect Kuwait's ability to produce food. Explain why the PPF before the war is different from the PPF after the war.
State three reasons for the PPF to shift to the right or left. Explain.
Meanwhile, in the country of Portugal, wool and wine can also be produced according to a linear PPF. However, when all resources are devoted to production of wine, Portugal can produce 100 barrels, but when all resources are devoted to wool production, portugal can produce 50 bushels. What are the opportunity costs in Portugal of producing a barrel of wine?
Use the diagram below to answer the questions that follow. (a) What change could cause the PPF to shift from the original curve (HJ) to the new curve (MN)? (b) Under what conditions might an economy be operating at point Z? (c) Why might a government implement a policy to move the economy from Point V to Point W?