Principles of Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421193
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 3, Problem 3.4P
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In 1939, the box office records set by Gone with the Wind and The Wizard of Oz proved to Hollywood studios that investing in Technicolor was worth every penny. Nevertheless, a reversal of fortune hit the film industry as the United States entered World War II. Wartime shortages made celluloid nitrate more costly, so Hollywood studios reverted to primarily black and white. The few Technicolor musicals released only recovered their production costs. The graph shows Metro-Goldwyn-Mayer's (MGM) production of Technicolor movies before World War II. Modify the graph to describe the wartime period for MGM. Assume that nothing changes except the items discussed in the question.
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Briefly explain how an economy could shift production from an inefficient point of production (such as point E in the picture above) to an efficient point of production (such as point C).
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Principles of Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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