Micro Economics For Today
Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 2, Problem 13SQ
To determine

Changes in the PPC when more fishing skill laborers are employed.

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Suppose an economy uses two resouces (labor and capital) to produce two goods (wheat and cloth). Capital is relatively more useful in producing cloth, and labor is relatively more useful in producing wheat.  If the supply of capital falls by 10 persent and the supply of labor increases by 10 percent, how will the PPF for wheat and cloth change?
The diagram above shows two PPF curves. Answer the following questions. Which of the two points on the PPF-1 will allow this economy to grow more quickly to reach PPF-2? Explain.  If the economy is operating at point A, what does this mean? (one sentence) ( Assume at this point in time the economy is operating at point D, what does this mean? Describe two major changes in the economy that will help the economy move to point B.  What does it mean when the PPF is represented by a curve and not a straight line?
The economy was at point A producing 100X and 200Y. It moved to point B where it produces 200X and 300Y. It follows that point A may have been a point below the economy's production possibilities frontier (PPF), while point B may lie on the PPF. the economy's PPF could have shifted outward and point B was a point on the economy's old PPF the economy has moved from one point on its PPF to another point on the same PPF.
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