The implication of increase in the productivity of crop in the economy.

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4. Economic growth and PPCS The blue (inner) curve on the following graph shows the current production possibilities curve (PPC) for the economy of Econoland, and the green (outer) curve shows the PPC for Econoland next year if the economy were to operate at point B today. That is, investment choices today impact the growth of the economy, and thus the PPC for next year. PPC Next Year PPC Today CAPITAL GOODS CONSUMPTION GOODS

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Chapter 2, Problem 9SQ

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The implication of increase in the productivity of crop in the economy.

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4. Economic growth and PPCS The blue (inner) curve on the following graph shows the current production possibilities curve (PPC) for the economy of Econoland, and the green (outer) curve shows the PPC for Econoland next year if the economy were to operate at point B today. That is, investment choices today impact the growth of the economy, and thus the PPC for next year. PPC Next Year PPC Today CAPITAL GOODS CONSUMPTION GOODS

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.

The following graph shows the production possibilities curve (PPC) of an economy that produces clothing and steel. The black points (plus symbols) represent three possible output levels in a given month. You can click on the points to see their exact coordinates. (?) 40 35 B 0 90 180 270 380 450 540 630 720 STEEL (Millions of tons) Suppose the economy initially produces 15,000 pieces of clothing and 450 million tons of steel, which is represented by point A. The opportunity cost of producing an additional 5,000 pieces of clothing (that is, moving production to point B) is_ tons of steel. (A. 54 million, B. 72 Million, C. 90 Million, D. 108 Million. E. 135 Million) Suppose, instead, that the economy currently produces 378 million tons of steel and 20,000 pieces of clothing, which is represented by point B. Now the opportunity cost of producing an additional 5,000 pieces of clothing (that is, moving to point C) is_____ tons of steel. (A. 54 Million B. 72 Million C. 90 million E. 108…