The effect on PPF for Wheat and cloth if the supply of capital falls by 10% and the supply of labor increases by 10%.
Concept Introduction:
The resources in the economy are scarce for the individuals as well as the economy as a whole, so it becomes important to use these resources efficiently in the production of goods and services. Efficiency in use of resources is getting the most of the available resources. The
If there is a change in the resources that affects both the goods on the production possibilities frontier curve, it will shift parallel to the original curve. However, if the change in resources only affects one of the products, it will bring about a change or movement along the PPF curve.
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- Draw a production possibilities frontier (PPF) for oil and food, where food production (Qf) is in the vertical axis and oil production (Qo) is in the horizontal axis. Draw an initial production point on the PPF where the slope of the PPF equals minus the relative price of oil. Label this point 1. If the price of oil on world markets rises sharply due to political reasons, determine the change in production; label the new point on the PPF with a 2. How does this change in the price of oil affect the income distribution in the oil producing countries, assuming there are capital owners and workers involved in the production process?arrow_forwardConsider Economia, a nation that produces only clothes and food. On their straight-line PPF, food is measured on the horizontal axis and clothes are measured on the vertical axis. If Economia produces no food, it can produce 1200 units of clothing; if it produces no clothing, it can produce 4800 units of food. Calculate the slope of the nation's PPF. Economia would like to produce one more unit of food. To do so, it must sacrifice how many units of clothing?arrow_forwardSuppose Sarah and Julia both work at a bakery making bread and muffins. In an hour, Sarah can either make 10 loaves of bread or 40 muffins, while Julia can either make 12 loaves of bread or 60 muffins. Both Sarah and Julia work 8 hours a day. a) Draw the daily PPF for Sarah and Julia b) What is the opportunity cost to each of making one loaf of bread? c) Suppose you are the owner of the bakery. If Julia and Sarah are currently both spending all of their time making muffins, then which of them should you ask to start making bread? Explain your answer.arrow_forward
- The PPF curve shows a curved negative relationship between two goods this means that an increase in the production of one good requires which of the followingarrow_forwardThe accompanying graph contains the production. possibilities frontier (PPF) for Rubberland. Rubberland only makes two products, rubber band balls and rubber hoses, and on a given day can produce according to the PPF in the graph. Point A on the PPF represents the combination of the two goods Rubberland currently produces. When a new method of rubber processing is discovered, the productivity of all Rubberland's inputs increases. Please shift the PPF to show this change. Assume that Rubberland does not make more rubber band balls than they originally made at point A but still maximize their productive capabilities. Move point A to their new production point. How many more rubber hoses do they now produce per day than before? 20 more hoses per day Quantity of rubber band balls Incorrect 200 180 160 140 120 100 80 60 40 20 0 0 Rubberland's Production Possibilities 10 20 30 40 50 60 Quantity of rubber hoses PPF 70 80 90 100arrow_forwardAcme supply is analyzing a Production Possibilities Curve that compares the production of wrenches( x-axis) to the production of pliers (Y-axis). If the slope of the PPC is 2, the opportunity cost of producing pliers in terms of wrenches isarrow_forward
- a) Why is the PPF curve bowed outward. Is it due to increasing opportunity cost or decreasing opportunity cost or constant opportunity cost Type and answer using only one of the underlined words above b) What happens to the PPF curve during a recession? Will it shift inward or outward or remains constant Type and answer using only one of the underlined words above c) Suppose a technology is banned due to its adverse environmental impacts. Would the production possibilty curve shift inward or outward or remain constant due to this Type and answer using only one of the underlined words above d) How will a policy encouraging more immigration would shift the production possibility forntier. It will shift inward or outward or remain constant Type and answer using only one of the underlined words abovearrow_forwardThe accompanying graph contains the production possibilities frontier (PPF) for Rubberland. Rubberland only makes two products, rubber band balls and rubber hoses, and on a given day can produce according to the PPF in the graph. Point A on the PPF represents the combination of the two goods Rubberland currently produces. When a new method of rubber processing is discovered, the productivity of all Rubberland's inputs increases. Please shift the PPF to show this change. Assume that Rubberland does not make more rubber band balls than they originally made at point A but still maximize their productive capabilities. Move point A to their new production point. How many more rubber hoses do they now produce per day than before? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward11. 111. You may use this diagram below, to show the movement of the PPC Curve above. 4 CDs State the points which represent: Scarcity (8.75M) Choices (8.75M) Inefficiency (8.75M) Opportunity (8.75M) (Ctrl) - PPC1 TVsarrow_forward
- Before the first Gulf War, Kuwait had the capacity to produce a certain amount of oil from its oil wells. After the war, it found that capacity greatly diminished because the oil wells were on fire. Draw Kuwait's PPF before and after the war, assuming that the only two goods produced are oil and food. Further assume that setting the oil wells on fire did not affect Kuwait's ability to produce food. Explain why the PPF before the war is different from the PPF after the war.arrow_forwardCountry X and Country Y are neighbours. Both Country X and Country Y can produce two goods: food and clothing. In one week, Country X can produce 4,400 clothing units or 2,200 food units, or a mix of the two. In one week, Country Y can produce 5,000 clothing units or 2,000 food units, or a mix of the two. For both Country X and Country Y, their individual trade-offs between clothing units and food units are constant, regardless of how they allocate their time. Currently, Country X produces 2,400 clothing units and 1,000 food units per week while Country Y produces 2,500 clothing units and 1,000 food units per week. a. How is absolute advantage different from comparative advantage? b. Which country has the absolute advantage in food production? Which country has the absolute advantage in clothing production? Briefly explain.arrow_forwardThe accompanying graph contains the production possibilities frontier (PPF) for Rubberland. Rubberland only makes two products, rubber band balls and rubber hoses, and on a given day can produce according to the PPF in the graph. Point A on the PPF represents the combination of the two goods Rubberland currently produces. When a new method of rubber processing is discovered, the productivity of all Rubberland's inputs increases. Please shift the PPF to show this change. Assume that Rubberland does not make more rubber band balls than they originally made at point A but still maximize their productive capabilities. Move point A to their new production point. How many more rubber hoses do they now produce per day than before?arrow_forward
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning