Using a production possibilities frontier (PPF) diagram, determine how does the PPF change in response to the following events: Make sure to explicitly indicate what sectors you are representing, and what sort of assumptions each event implies (i.e., a neutral effect vs a sector-biased effect). The latter follows from your assumptions on the factor intensity of the sector you are representing. a) Increasing skilled migration into the country b) Imposing taxes on manufacturing (hint: define a two-sector producing economy, manufacturing and services). c) Decreasing the expenditure on research and development
Using a production possibilities frontier (
in response to the following events:
Make sure to explicitly indicate what sectors you are representing, and what sort of
assumptions each event implies (i.e., a neutral effect vs a sector-biased effect). The latter
follows from your assumptions on the factor intensity of the sector you are representing.
a) Increasing skilled migration into the country
b) Imposing taxes on manufacturing (hint: define a two-sector producing economy,
manufacturing and services).
c) Decreasing the expenditure on research and development
d) Implementation of easier rules for foreign investment
e) The effects of a pandemic
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Using a production possibilities frontier (
in response to the following events:
Make sure to explicitly indicate what sectors you are representing, and what sort of
assumptions each event implies (i.e., a neutral effect vs a sector-biased effect). The latter
follows from your assumptions on the factor intensity of the sector you are representing.
c) Decreasing the expenditure on research and development
d) Implementation of easier rules for foreign investment
e) The effects of a pandemic
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