3 The following graph shows the production possibilities curve (also known as the production possibilities frontier) of an economy that produces cars andcomputers. Suppose that a fall in this economy's saving rate results in a low level of private investment. Manufacturing plants crumble and aren'trepaired, and output drops.Adjust the production possibilities curve (PPC) to show the economy's new production possibilities after the fall in the saving rate.Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points willsnap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther.QUANTITY OF CARS (Millions)241600PPC10QUANTITY OF COMPUTERS (Millions)15gPPCSuppose society faces a broad tradeoff between allocating resources to the production of investment goods (computers) and consumption goods (cars)before the fall in the saving rate described above.Which of the following events would be most likely to lead to the fall in the saving rate you just illustrated?O Decreasing production of investment and consumption goodsDecreasing production of investment goods and increasing production of consumption goodsO Increasing production of investment goods and decreasing production of consumption goodsO Increasing production of investment and consumption goods

We know that Production possibility curve is the curve which shows all possible combinations of two…

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Economics

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ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The following graph shows the production possibilities curve (also known as the production possibilities frontier) of an economy that produces cars and
computers. Suppose that a fall in this economy's saving rate results in a low level of private investment. Manufacturing plants crumble and aren't
repaired, and output drops.
Adjust the production possibilities curve (PPC) to show the economy's new production possibilities after the fall in the saving rate.
Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will
snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther.
QUANTITY OF CARS (Millions)
24
16
0
0
PPC
10
QUANTITY OF COMPUTERS (Millions)
15
g
PPC
Suppose society faces a broad tradeoff between allocating resources to the production of investment goods (computers) and consumption goods (cars)
before the fall in the saving rate described above.
Which of the following events would be most likely to lead to the fall in the saving rate you just illustrated?
O Decreasing production of investment and consumption goods
Decreasing production of investment goods and increasing production of consumption goods
O Increasing production of investment goods and decreasing production of consumption goods
O Increasing production of investment and consumption goods

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