Interpreting a Production Possibilities Curve BUTTER ($ billions) 35- 30 25 20 15 10 5 C 0 5 d 10 15 20 Curve 1 25 Curve 2 GUNS ($ billions) 30 35 1. At which point on the curve is this nation likely to be at war? 2. How many billions of dollars are being spent on domestic goods at this point? On military goods? 3. At which point on the curve is this nation likely to be at peace, but still militarily prepared? 4. At this point, what is the amount of reduction in military spending from the point identified in question 1? 5. At which point is this nation in an apparent recession, underutilizing its resources? 6. What is the recessionary gap in terms of "butter"? What is the recessionary gap in terms of "guns"?
Interpreting a Production Possibilities Curve BUTTER ($ billions) 35- 30 25 20 15 10 5 C 0 5 d 10 15 20 Curve 1 25 Curve 2 GUNS ($ billions) 30 35 1. At which point on the curve is this nation likely to be at war? 2. How many billions of dollars are being spent on domestic goods at this point? On military goods? 3. At which point on the curve is this nation likely to be at peace, but still militarily prepared? 4. At this point, what is the amount of reduction in military spending from the point identified in question 1? 5. At which point is this nation in an apparent recession, underutilizing its resources? 6. What is the recessionary gap in terms of "butter"? What is the recessionary gap in terms of "guns"?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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