Concept explainers
(a)
Changes in U.S
(a)
Explanation of Solution
A war taken place in the US soil leads to reduction in capital stock, potential resources and also kills people. This in turn shifts the US’s PPF inward.
Production possibilities frontier (PPF) curve: PPF curve refers to the combinations of goods and services that can be produced using available resources.
(b)
Changes in U.S PPF.
(b)
Explanation of Solution
The discovery of new oil field increases the US’s resources. Thus, it shifts the PPF of U.S outward.
Production possibilities frontier (PPF) curve: PPF curve refers to the combinations of goods and services that can be produced using available resources.
(c)
Changes in U.S PPF.
(c)
Explanation of Solution
Decreasing
Production possibilities frontier (PPF) curve: PPF curve refers to the combinations of goods and services that can be produced using available resources.
(d)
Changes in U.S PPF.
(d)
Explanation of Solution
The new law decreases the productive efficiency of the labor that leads to the movement of a point which is on the frontier to the point that is inside the frontier.
Production possibilities frontier (PPF) curve: PPF curve refers to the combinations of goods and services that can be produced using available resources.
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Chapter 2 Solutions
Macroeconomics
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- Use the diagram below uploaded to answer the questions that follow. (a) What change could cause the PPF to shift from the original curve (HJ) to the new curve (MN)? (b) Under what conditions might an economy be operating at point Z? (c) Why might a government implement a policy to move the economy from Point V to Point W?arrow_forwardHelp! The question is to Explain how the following situation would affect a nation's production possibilities curve. A category 5 hurricane destroys over 40% of the nation's productivity. The two questions are What happens to PPF and an explanation. The options for both are in the drop down.arrow_forwardHow would the production possibilities curve be impacted? Group of answer choices The PPC would shift outward The PPC would shift inward The point on the PPC would move closer to the curve The point on the PPC would move closer to the origin HERE ARE THE QUESTIONS: Explain how each of the following situations would affect a nation’s production possibilities curve. A law is passed which makes community college tuition free for all U.S. citizens. An unexpectedly mild spring results in a bumper crop of citrus fruit in both Florida and California. A change in immigration laws significantly decreases the number of immigrant workers entering the country. The amount of time that unemployed workers can collect unemployment insurance is decreased from 96 weeks to 26 weeks following the end of a recession, resulting in workers remaining unemployed for a shorter period of time. An innovation in desalinization technology allows for the more efficient conversion of salt water…arrow_forward
- In this assignment, you will demonstrate your ability to draw a simple production possibilities curve given data on the quantity of one input (labor) available and the amount of labor required to produce each of two outputs (guns and butter). You should also be able to identify the opportunity cost of one good in terms of the other as the slope of the PPC. You will explain your analysis of the figures to explain why it’s not possible to produce combinations of the two goods outside the PPC. Suppose a nation has a total of 12 units of labor, which can be used to produce either guns or butter. One gun takes 6 units of labor to produce and 1 butter takes 2 units of labor to produce. 1. Explain why scarcity exists in this economy. Use the data as evidence of your reasoning. 2. What is the maximum quantity of guns that can be produced? 3. What is the maximum quantity of butter than can be produced? 4. Draw the nation’s production possibility curve. 5. What is the opportunity cost of guns in…arrow_forwardor each of the following separate parts, you are required to draw one or two graphs. Make sure that you label both axes correctly. (a) Consider the demand for gasoline. Suppose more substitutes for gasoline are available. Draw a graph to show how the price of elasticity of demand for gasoline changes. (b) Country A produces two goods: chicken wings and pizzas. If unemployment rate increases, draw how the PPF of country A will change. Assume that opportunity costs are increasing. (c) Consider the market for new houses. Suppose the prices of the materials for building houses increase. Draw a graph to show how the equilibrium of market for new houses changes.arrow_forward
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