Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Chapter 3, Problem 10P
To determine
Amongst the given economies, the economy that will grow rapidly.
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Economy A produces more capital goods and fewer consumers goods than economy B. Which economy will grow more rapidly? Draw two production possibilities curves, one for Economy A and one for Economy B. Demonstrate graphically how one can grow more rapidly than the other.
Draw a graph of a production possibilities curve with consumption goods and capital goods that displays the law of increasing opportunity costs. What do points on, inside and outside the curve represent? What does a rightward shift of the curve represent? How is economic growth expressed in terms of the production possibilities model?
The only way that a society can produce outside the production possibilities curve is
:by producing efficiently.
through economic growth.
by obeying the Law of Increasing Relative Cost.
to use the concept of opportunity cost.
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- Use the concept of an economy-wide production possibilities to explain full employment output and economic growth. Why is full employment and economic growth both important for all economies?arrow_forwardUsing this table, draw a production possibilities curve. What assumptions is this production possibilities curve based?arrow_forwardThe attainable production points on a production possibilities curve are?arrow_forward
- Explain how (if at all) each of the following events affects the location of a country’sproduction possibilities curve.a.The quality of education increases.b.The number of unemployed workers increases.c.A new technique improves the efficiency of extracting copper from ore.d.A devastating earthquake destroys numerous production facilities.(a)The curve will shift out as the labor resource improves.(b)The curve will not shift, but the economy will produce further inside the curve.(c)The curve will shift out as a result of the technological improvement.(d)The curve will shift in as resources are destroyed.7arrow_forwardAssume that a country with a market economy produces capital goods and consumer goods, use the data that follows to answer the question that follows: Capital Goods Consumer Goods 50 0 40 20 30 35 20 45 10 50 0 51 Does the “law” of increasing opportunity cost apply in the…arrow_forwardDraw a production possibilities frontier for a country that produces two goods: capital goods and consumption goods. Show a point of production that will allow a country to achieve the maximum amount of future growth while still producing a small amount of consumption goods.arrow_forward
- Consider the graph. What will happen if technological development raises the maximum amount of goods that can be produced by the economy? a. A movement along the production possibilities curve towards the horizontal axis. b. An outward rotation of the production possibilities curve at its intersection with the vertical axis. c. An outward rotation of the production possibilities curve at its intersection with the horizontal axis. d. An outward shift of the production possibilities curve.arrow_forwardAccumulation of capital and change in technology bring economic growth, which means that the PPF keeps shifting outward: Production that was unattainable yesterday becomes attainable today; production that is unattainable today will become attainable tomorrow. Why doesn’t this process of economic growth mean that scarcity is being defeated and will one day be gone?arrow_forwardQ6 The production possibilities curve below applies to an economy, Prospera that produces only ice-cream sodas and industrial robots. What is the opportunity cost of industrial robots in terms of ice cream sodas when Prospera moves from point a to b and b to c? What is the opportunity cost of ice cream sodas in terms of industrial robots when Prospera moves from point e to d and d to c? How a technological improvement in the assembly of industrial robots would affect the production possibilities curve? If industrial robots can be viewed as a capital good, then describe how this economy’s decision to produce more industrial robots will affect its future production possibilities curve? Can Prospera produce 6 industrial robots and 40 ice-cream sodas Why? How would you describe production in Prospera, If 4 industrial robots and 20 ice-cream sodas are produced?arrow_forward
- Explain how (if at all) each of the following events affects the location of a country’s production possibilities curve:a. The quality of education increases.b. The number of unemployed workers increases.c. A new technique improves the effifi ciency of extracting copper from ore.d. A devastating earthquake destroys numerous production facilities.arrow_forwardGraph 1: Draw a production possibilities model with 4 points labelled A, B, C, D, one inside, two on, and one outside the production possibilities curve. Explain the 4 points in terms of scarcity, choice and efficiency. Graph 2: Draw a production possibilities model which illustrates economic growth.arrow_forwardExplain how each of the following situations would affect a nation’s production possibilities curve. COVID -19 increases the number of unemployed workers in the nation. A global pandemic results in 6 million confirmed cases and the death of over 400,000 individuals. A switch to online delivery, increases access to education in the nation’s colleges and universities but might have a detrimental impact on the quality of education. The nation passes a law requiring all employees to give the employees 16 weeks of paid vacation each year. Prior to this law employers were not legally required to give employees any paid vacation time. What happens to the PPF ? explain.arrow_forward
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