Based on your own experience and reasoning, list 2 j, Which would be least likely to cause the production possibilities curve to shift to the right? .2 & .4 & .4 In the section of the curve shown here, the slope can be calculated between points B and B. some examples of questions that can be answered using that model. Figure 2.9 Efficient Versus Inefficient Production illustrates the result. Figure 2.5 The Combined Production Possibilities Curve for Alpine Sports. Proponents of economic growth make all of the following arguments except: An outward shift of a nation's production possibilities curve:Multiple Choice could reduce the nation's real GDP. Which of the following reasons could explain why an economy would be operating inside its production possibilities curve (PPC)? C.increased due to higher wages, expanded job accessibility, changing preferences and Understand specialization and its relationship to the production possibilities model and comparative advantage. The curve is a downward-sloping straight line, indicating that there is a linear, negative relationship between the production of the two goods. With all three plants producing only snowboards, the firm is at point D on the combined production possibilities curve, producing 300 snowboards per month and no skis. a. Increased globalization that moves the economy from a manufacturing-based economy to a more service-based economy c. A recession caused by a dro. b. Specialization implies that an economy is producing the goods and services in which it has a comparative advantage. As the economy approaches full employment, labor becomes relatively scarce. The UK has seen strong inward migration over the last fifteen years (averaging over 200,000 a year) as has Canada. Show this shift in a production function graph and labor supply graph drawn together one above the other. Donec aliquet. A shift from service to manufacturing jobs. Plant 3, though, is the least efficient of the three in ski production. B) When an economy is at full employment, does that mean that unemployment is zero? B. Producing 1 additional snowboard at point B requires giving up 2 pairs of skis. In an actual economy, with a tremendous number of firms and workers, it is easy to see that the production possibilities curve will be smooth. b. C a change in the amounts of one good desired. Notes taken over assigned chapter power point. Which of the following would most likely shift the production possibilities curve inward? Workers, for example, specialize in particular fields in which they have a comparative advantage. b. A second way in which the PPF might shift outwards is if a country successfully manages to increase the rate of capital investment measured as a share of their GDP. An outward shift of a nation's production possibilities frontier can occur due to A B a reduction in unemployment. (a) an increase in technology (b) an increase in the number of workers available (c) an improvement in the literacy rate (d) a reduction in the unemployment rate, Which of the following will cause the production possibilities curve to shift inward? Which of the following is not considered a source of increased labor efficiency? Rising productivity. For example, suppose Carmen splits her time as a . According to the statistics, the distribution of money income: a. fluctuated widely since 1947. b. changed significantly in favor of the bottom 5 percent. B.occurs, not because of growth, but because common resources are treated as free goods. Economists often use models such as the production possibilities model with graphs that show the general shapes of curves but that do not include specific numbers. The absolute value of the slope of a production possibilities curve measures the opportunity cost of an additional unit of the good on the horizontal axis measured in terms of the quantity of the good on the vertical axis that must be forgone. D. increased for unmarried women but decreased for married women. It's not (necessarily) just an increase in output. This is a result of transferring resources from the production of one good to another according to comparative advantage. c. A decrease in productivity. b. Because technological innov. Notice that this production possibilities curve, which is made up of linear segments from each assembly plant, has a bowed-out shape; the absolute value of its slope increases as Alpine Sports produces more and more snowboards. In this article, you'll get a quick review of the production possibilities curve (PPC) model, including: what it's used to illustrate. For each of the following, compute the future value: Find (a) the exact interest and (b) the ordinary interest to the nearest cent. If the economy were to . An increase in the labor force b. Output began to grow after 1933, but the economy continued to have vast numbers of idle workers, idle factories, and idle farms. Suppose Alpine Sports expands to 10 plants, each with a linear production possibilities curve. How many jobs were lost, as a result, in a labor force of 175 million? b. d. at a point within the production possibilities curve. o Shifts in LRAS are an alternative way of indicating there has been a shift in the economy's production possibilities curve. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. A decrease in the price level. c. An increase in the unemployment rate. B) In a growing and dynamic economy, jobs are constantly being destroyed and created. d. Destruction of resources. In this video I explain how the production possibilities curve shifts when there is a change in resources or a change in technology. A decrease in growth rates will cause: A. no shift of an economy's production possibilities curve B. an outward shift of an economy's production possibilities curve C. a movement from a point inside a; The potential output of an economy is: A. the output level at which nominal GDP is equal to real GDP. ensures the nation of an increase in real GDP per capita. the more outward the shift in the graph the increase in the real GDP . (2 points) Fireworks for everyone in their sightline A toll road A glass of water Seats at a movie theater An unclaimed spot on a beach Which, 1.08 Basic Economic Concepts Q. The opportunity cost of an additional snowboard at each plant equals the absolute values of these slopes (that is, the number of pairs of skis that must be given up per snowboard). Rapid growth rates of production and employment. Suppose the first plant, Plant 1, can produce 200 pairs of skis per month when it produces only skis. In Chinas case, investment in 2010-12 reached nearly half of their annual GDP! Ways of increasing the supply of labour available to an economy: Boston House, Fewer workers are bad if you are cut, and if you are left to do more work. A) Technological advances always lead to the permanent displacement of workers. To construct a combined production possibilities curve for all three plants, we can begin by asking how many pairs of skis Alpine Sports could produce if it were producing only skis. a. more fluid labor markets b. worker retraining c. more technological change d. none of the above, Which of the following is most likely to lead to sustained long-run growth? Nations specialize as well. It will cause the PPF to shift . Exhibit 2-10 Production possibilities curve data. The opportunity cost of skis at Plant 2 is 1 snowboard per pair of skis. The Production Possibilities Curve (PPC) is a graphical representation of the different combinations of goods and services that an economy can produce with its available resources. Employment and prices but not total output c. Prices and total output but not employment d. Prices, employment and total output. C) Rapid population growth that increases the burden on the education. C) a declining incidence of business cycle fluctuations. Such specialization is typical in an economic system. Which of the following is the most important source of US economic growth in the long run? Select one: a. b. Suppose that Alpine Sports is producing 100 snowboards and 150 pairs of skis at point B. Explain. The U.S. economy looked very healthy in the beginning of 1929. Why, or why not? Which of the following will not cause the production possibilities frontier to shift outwards? Pellentesqu, Explore over 16 million step-by-step answers from our library, ctum vitae odio. D. growth provides an economic environment favorable to education and self-fulfillment. Because technological innovat. a. With all three of its plants producing skis, it can produce 350 pairs of skis per month (and no snowboards). An outward shift of a nation's production possibilities curve is equivalent to a: Select one: a. rightward shift of the nation's aggregate demand curve. b. downward shift of the nation's aggregate expenditure curve. Then find (c) the amount by which the ordinary interest is larger. Use the production possibilities model to distinguish between full employment and situations of idle factors of production and between efficient and inefficient production. production possibilities curve This might come about either from the natural growth of a country's . B. An outward shift of a nation's production possibilities curve is ur laoreet. Economic growth means that an economy has increased its ability to produce more. (Many students are helped when told to read this result as 2 pairs of skis per snowboard.) We get the same value between points B and C, and between points A and C. Figure 2.2 A Production Possibilities Curve. Imagine that you are suddenly completely cut off from the rest of the economy. Does technological change create unemployment? At point A, the economy was producing SA units of security on the vertical axisdefense services and various forms of police protectionand OA units of other goods and services on the horizontal axis. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. a. increase in the working age population b. decrease in the size of the labor force c. technological advance, Which of the following would NOT produce an outward shift of the production possibilities curve? We will see in the chapter on demand and supply how choices about what to produce are made in the marketplace. It is, Assume that political instability around the world causes American business firms to decrease business investment signaling the start of a recession in the economy. In drawing production possibilities curves for the economy, we shall generally assume they are smooth and bowed out, as in Panel (b). Two years later she added a third plant in another town. In radios? Slow growth rates of production and employment. We can think of this as the opportunity cost of producing an additional snowboard at Plant 1. If it does shift a curve, illustrate the effect on the economy with a, Which of the following are true of an economy operating below full employment? The table in Figure 2.2 A Production Possibilities Curve gives three combinations of skis and snowboards that Plant 1 can produce each month. If the actual economy is operating below its full-employment long-run equilibrium, then an inflationary gap will develop. If it fails to do that, it will operate inside the curve. Population growth was consistent with the rate of technological innovation. Nam risus ante, dapibus a molestie consequat, ultri. Which of the following does NOT lead to long-run economic growth? How would an economy-wide technological improvement affect wages? 214 High Street, Now suppose that a large fraction of the economys workers lose their jobs, so the economy no longer makes full use of one factor of production: labor. At the same time, manufacturing output experienced slightly more rapid growth than the overall economy. Producing 100 snowboards at Plant 2 would leave Alpine Sports producing 200 snowboards and 200 pairs of skis per month, at point C. If the firm were to switch entirely to snowboard production, Plant 1 would be the last to switch because the cost of each snowboard there is 2 pairs of skis. The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions. In the summer of 1929, however, things started going wrong. The growth of output per effective worker increa, Which of the following is not a factor in economic growth? Resources are fixed. The combined production possibilities curve for the firms three plants is shown in Figure 2.5 The Combined Production Possibilities Curve for Alpine Sports. More generally, the absolute value of the slope of any production possibilities curve at any point gives the opportunity cost of an additional unit of the good on the horizontal axis, measured in terms of the number of units of the good on the vertical axis that must be forgone. Should we devise and adopt an economic model which seeks low employment rather than full employment? C. work-activity rate. The process through which an economy achieves an outward shift in its production possibilities curve is called economic growth. An economys factors of production are scarce; they cannot produce an unlimited quantity of goods and services. The law of increasing opportunity cost tells us that, as the economy moves along the production possibilities curve in the direction of more of one good, its opportunity cost will increase. If Alpine Sports selects point C in Figure 2.9 Efficient Versus Inefficient Production, for example, it will assign Plant 1 exclusively to ski production and Plants 2 and 3 exclusively to snowboard production. Existing workers in a country get trained to operate widely used accounting software. (Consider This) Over the past several decades, the percentage of women in the paid U.S. 2.3 Applications of the Production Possibilities Model, 4.2 Government Intervention in Market Prices: Price Floors and Price Ceilings, 5.2 Responsiveness of Demand to Other Factors, 7.3 Indifference Curve Analysis: An Alternative Approach to Understanding Consumer Choice, 8.1 Production Choices and Costs: The Short Run, 8.2 Production Choices and Costs: The Long Run, 9.2 Output Determination in the Short Run, 11.1 Monopolistic Competition: Competition Among Many, 11.2 Oligopoly: Competition Among the Few, 11.3 Extensions of Imperfect Competition: Advertising and Price Discrimination, 14.1 Price-Setting Buyers: The Case of Monopsony, 15.1 The Role of Government in a Market Economy, 16.1 Antitrust Laws and Their Interpretation, 16.2 Antitrust and Competitiveness in a Global Economy, 16.3 Regulation: Protecting People from the Market, 18.1 Maximizing the Net Benefits of Pollution, 20.1 Growth of Real GDP and Business Cycles, 22.2 Aggregate Demand and Aggregate Supply: The Long Run and the Short Run, 22.3 Recessionary and Inflationary Gaps and Long-Run Macroeconomic Equilibrium, 23.2 Growth and the Long-Run Aggregate Supply Curve, 24.2 The Banking System and Money Creation, 25.1 The Bond and Foreign Exchange Markets, 25.2 Demand, Supply, and Equilibrium in the Money Market, 26.1 Monetary Policy in the United States, 26.2 Problems and Controversies of Monetary Policy, 26.3 Monetary Policy and the Equation of Exchange, 27.2 The Use of Fiscal Policy to Stabilize the Economy, 28.1 Determining the Level of Consumption, 28.3 Aggregate Expenditures and Aggregate Demand, 30.1 The International Sector: An Introduction, 31.2 Explaining InflationUnemployment Relationships, 31.3 Inflation and Unemployment in the Long Run, 32.1 The Great Depression and Keynesian Economics, 32.2 Keynesian Economics in the 1960s and 1970s, 32.3. A) eventually lead to a shift to the right of the production possibilities curve. D. work-nonwork ratio. Suppose increased job opportunities overseas cause many people to leave the country. It illustrates the production possibilities model. This is because the position of long run aggregate supply curve is determined by the nation's production possibilities curve which shifts when there is an economic growth. B. Economists call this economic growtha sustained rise over time in a nation's production of goods and services. c) a decline in the economy's total production. The Industrial Revolution and modern economic growth resulted in: Economic historians date the start of the Industrial Revolution around the year 1776, when. One, of course, was increased defense spending. You can't have a sustained increase in output unless you have an increase in the ability to do so. Which one of the following people is frictionally unemployed? Think about what life would be like without specialization. If nation A commits a larger share of its resources to capital and technological improvements than nation B, then over time _____ will realize _____ outward shifts in its production possibilities curve. The increase in resources devoted to security meant fewer other goods and services could be produced. If the firm wishes to increase snowboard production, it will first use Plant 3, which has a comparative advantage in snowboards. b. could increase the nation's real GDP, but not the real- GDP per capita. a. In either case, production within the production possibilities curve implies the economy could improve its performance. In drawing the production possibilities curve, we shall assume that the economy can produce only two goods and that the quantities of factors of production and the technology available to the economy are fixed. Its both. Production is based on how much capital, labor, natural resources, and technology it has to produce. Customer perspective. It illustrates the production possibilities model. Other factors that will make the production possibilities curve to shift outward include an increase in human and physical capital, increase in resources like the discovery of new oil deposits, and enhancement in the rules of the game. B. Investment in capital goods such as new plant and machinery, factories, new hardware and software and investment in critical infrastructure leads to a higher capital stock. An increase in the number of hours factories is in use. If you're seeing this message, it means we're having trouble loading external resources on our website. Many countries, for example, chose to move along their respective production possibilities curves to produce more security and national defense and less of all other goods in the wake of 9/11. Improved methods of production c. An increase in the education and training of the labor force d. A decrease in unempl, Which of the following shifts the production possibilities frontier outward? For example Ethiopia has a median age of 17.8 years and Rwanda has a median age of 19.0 years. Select one: a. We may conclude that, as the economy moved along this curve in the direction of greater production of security, the opportunity cost of the additional security began to increase. Similarly, policies that encourage technological change, such as tax credits for research and development, also lead to more economic growth. A teenage worker is more likely to be unemployed than an older worker. A production possibility frontier (PPF) illustrates the combinations of output of two products that a country can supply using all of their available factor inputs in an efficient way. It is not possible for the production to move inside the curve. In this case we have categories of goods rather than specific goods. In a nation with excessive population, and unskilled labor, the production possibilities curve tends to do what? a. moving from less than full employment to full employment, b. developing a more efficient technology, c. more efficiently allocating productive resources already available. Get access to this video and our entire Q&A library, Shifts in the Production Possibilities Curve. D. Improved labor productivity. The next 100 pairs of skis would be produced at Plant 2, where snowboard production would fall by 100 snowboards per month. What is the evidence for this? QUESTION 1 Exhibit 11-10 Labor and wage rate data Labor 6 7 8 9 10 Wage $12 13 14 15 16 2. This might be alleviated by the ability to import. Figure 1: Economic growth in the PPC model. Producing more snowboards requires shifting resources out of ski production and thus producing fewer skis. Usually, economic growth is demonstrated by the outward change in the production possibilities curve. c. There is no involuntary unemployment. Nam lacinia pulvinar tortor nec facilisis. C. An increase in the minimum wage rate. A. Leftward shift of the production possibilities curve b. developing a more efficient technology. b. Course Hero is not sponsored or endorsed by any college or university. Instead, it lays out the possibilities facing the economy. You can't have , Posted 5 years ago. The increase in spending on security, to SA units of security per period, has an opportunity cost of reduced production of all other goods and services. Production Possibility Frontier - PPF: The production possibility frontier (PPF) is a curve depicting all maximum output possibilities for two goods, given a set of inputs consisting of resources . More immigrant workers are added to a nation. The opportunity cost of an additional snowboard at each plant equals the absolute values of these slopes. a. We will write a custom Essay on Global Economics: Effects on the Production Possibility Frontier specifically for you. its production potential is decreases. An increase in the number of hours in the work week. In Panel (a), a point such as N is not attainable; it lies outside the . If more workers join the labor force of a country, the unemployment rate tends to _______. If Alpine Sports were to produce still more snowboards in a single month, it would shift production to Plant 2, the facility with the next-lowest opportunity cost. An outward shift in a production possibilities curve is illustrated in Figure 2.13 "Economic Growth and the Production Possibilities Curve". Figure 2.4 Production Possibilities at Three Plants. Production totals 350 pairs of skis per month and zero snowboards. What is technological unemployment? However, the extent to which a growing population leads to improved living standards and sustainable development is open to question. D. higher marginal costs relative to production. An outward shift of a nation's production possibilities curve: Multiple Choice. A.total output/worker-hours. Moreover, the price of, Which of the following is an example of a non-rival good? These intercepts tell us the maximum number of pairs of skis each plant can produce. In that case, it produces no snowboards. A. growth is the basic means of improving living standards. What are some examples of technological change that has caused unemployment? The number of unemployed persons increased by a smaller percentage, The long-run aggregate supply curve shifts right if? It can shift to ski production at a relatively low cost at first. Suppose there are 100 million workers in the economy, and full employment is defined as 96% of them being employed. A. downward shift of the nation's aggregate expenditure curve. A) Lower productivity due to a malnourished workforce. One cause of structural unemployment is due to: a) workers looking for better jobs. Lorem ipsum dolor sit amet, consectetur adipiscing elit. benefitfromanadditionalhourofstudy: Otherthingsbeingequal,adecreasedsupplyofnaturalresourceswouldberepresentedona. In our example, all three plants are equally good at snowboard production. ensures the nation of an increase in real GDP per capita. A lower level of capital per worker. Declining adult literacy rates C. Widespread relocation of manufacturing firms to low-wage nations D. National program of ch, Which of the following reasons could explain why an economy would be operating inside its production possibilities curve (PPC)? A. Put calculators on the vertical axis and radios on the horizontal axis. Here, we have placed the number of pairs of skis produced per month on the vertical axis and the number of snowboards produced per month on the horizontal axis. These values are plotted in a production possibilities curve for Plant 1. Economics questions and answers. Plant 3 has a comparative advantage in snowboard production because it is the plant for which the opportunity cost of additional snowboards is lowest. C. Movement from a point near the vertical axis to a point near the horizontal axis on the Which of the following would shift a nation's entire production possibilities curve outward?