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Consumption goods 7. The production possibilities A frontier (beside) shows the available tradeoffs between consumption goods and capital goods. Suppose two countries facethis identical production possibilities frontier. Capital goods Investment: This is indicated by a tradeoff between the production of consumergoods and capital goods. Investment results if society moves along the production possibilities curve, producing more capital goods and fewer consumption goods. Answer the following questions. a. Suppose Party Country chooses to produce at point A while Sleepy Country chooses to produce at Point B. Which country will experience more growth inthe future? Why? b. In this model, what is the opportunity of future growth?

Consumption goods 7. The production possibilities A frontier (beside) shows the available tradeoffs between consumption goods and capital goods. Suppose two countries facethis identical production possibilities frontier. Capital goods Investment: This is indicated by a tradeoff between the production of consumergoods and capital goods. Investment results if society moves along the production possibilities curve, producing more capital goods and fewer consumption goods. Answer the following questions. a. Suppose Party Country chooses to produce at point A while Sleepy Country chooses to produce at Point B. Which country will experience more growth inthe future? Why? b. In this model, what is the opportunity of future growth?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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c. Demonstrate on the graph below the impact of growth on a production possibilities frontier such as the one shown above. Would the frontier for SleepyCountry shift more or less than that for Party Country? Why? ConsumptionGoods Capital Goods d. On the graph below, show the shift in the production possibilities frontier if there was an increase in technology that only affected the production of capitalgoods. ConsumptionGoods Capital Goods e. Does the shift above imply that all production must be in the form of capital goods? Page 8 of 2
Transcribed Image Text:c. Demonstrate on the graph below the impact of growth on a production possibilities frontier such as the one shown above. Would the frontier for SleepyCountry shift more or less than that for Party Country? Why? ConsumptionGoods Capital Goods d. On the graph below, show the shift in the production possibilities frontier if there was an increase in technology that only affected the production of capitalgoods. ConsumptionGoods Capital Goods e. Does the shift above imply that all production must be in the form of capital goods? Page 8 of 2
Date: Shift in Production Possibilities Curve Consumption goods 7. The production possibilities frontier (beside) shows the available tradeoffs between consumption goods and capital goods. Suppose two countries facethis identical production possibilities frontier. Cápital goods Investment: This is indicated by a tradeoff between the production of consumergoods and capital goods. Investment results if society moves along the production possibilities curve, producing more capital goods and fewer consumption goods. Answer the following questions. a. Suppose Party Country chooses to produce at point A while Sleepy Country chooses to produce at Point B. Which country will experience more growth inthe future? Why? b. In this model, what is the opportunity of future growth? Page
Transcribed Image Text:Date: Shift in Production Possibilities Curve Consumption goods 7. The production possibilities frontier (beside) shows the available tradeoffs between consumption goods and capital goods. Suppose two countries facethis identical production possibilities frontier. Cápital goods Investment: This is indicated by a tradeoff between the production of consumergoods and capital goods. Investment results if society moves along the production possibilities curve, producing more capital goods and fewer consumption goods. Answer the following questions. a. Suppose Party Country chooses to produce at point A while Sleepy Country chooses to produce at Point B. Which country will experience more growth inthe future? Why? b. In this model, what is the opportunity of future growth? Page
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