Draw a production possibility frontier. The vertical axis shows the production of public sector goods and the horizontal axis shows production of private sector goods. The economy is currently producing at point A on the frontier where 50 per cent of all production is devoted to public sector goods and 50 per cent to private sector goods. (a) Mark the following points on your drawing. (i) Point A. (in) Point B which shows production following the election of a goverment which increases government spending on both education and the National Health Service. (ili) Point C where unemployment is present in the economy. (iv) Point D where the government takes over production of all goods and services in the econory. (b) Draw another diagram putting on it the original production possibility Frontier you drew for (a), labelling it AA. (i) Draw a new production possibility frontier on the diagram, labelling it PP, which shows the position after a devastating war has hit the economy. (in) Draw another PPF labelling it QQ which shows an increase in productivity in the econorny such that output from the same amount of resources increases by 50 per cent in the public sector but twice that amount in the private sector.
Draw a
production of public sector goods and the horizontal axis shows
production of private sector goods. The economy is currently
producing at point A on the frontier where 50 per cent of all
production is devoted to public sector goods and 50 per cent to
private sector goods.
(a) Mark the following points on your drawing.
(i) Point A.
(in) Point B which shows production following the election of a
goverment which increases government spending on both
education and the National Health Service.
(ili) Point C where
(iv) Point D where the government takes over production of all
goods and services in the econory.
(b) Draw another diagram putting on it the original production
possibility Frontier you drew for (a), labelling it AA.
(i) Draw a new production possibility frontier on the diagram,
labelling it PP, which shows the position after a devastating
war has hit the economy.
(in) Draw another PPF labelling it QQ which shows an increase
in productivity in the econorny such that output from the
same amount of resources increases by 50 per cent in the
public sector but twice that amount in the private sector.
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