Chapter 2, Problem 8QFR

Why does a production possibilities frontier have  to be downward sloping and  have a bowed out shape?  The present choice between investing in capital goods and producing consumer goods now affects the ability of an economy to produce in the future.  Explain.

Question 2 In answering the question, you should emphasize the line of reasoning that generated your results; it is not enough to list the results of your analysis. Include correctly labeled diagrams, if useful or required, in explaining your answer. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. Assume that the country of Fischerland produces only consumer goods and capital goods. CONSUMER GOODS CAPITAL GOODS a. The graph above shows the production possibilities curve for Fischerland. The production of which of the following exhibits increasing opportunity costs: consumer goods only, capital goods only, both goods, or neither good? b. Redraw the graph given above. Show a point that represents fully employed and efficiently used resources on the redrawn graph and label it A. c. Assume there is a recession in Fischerland. On your graph in part (b), label as C a point representing the recession. d. Identify a fiscal policy…

Determine whether the following statements is valid or not. The problem of scarcity is due to the human unlimited wants.