Suppose a country which produces only agricultural goods and electronic goods. Both goods use capital and labour as production inputs, however, the agricultural goods are assumed to be more labour-intensive. On three separate graphs, draw the “original” production possibility boundary (electronic goods on the horizontal axis, agricultural goods on the vertical axis) and illustrate each of the following situations: a. the country observes large increases in immigration; b. there is a technological improvement in the production of military goods only; c. a neighbouring country threatens to invade and the country responds by devoting more resources to military goods.
Suppose a country which produces only agricultural goods and electronic goods. Both goods
use capital and labour as production inputs, however, the agricultural goods are assumed to
be more labour-intensive. On three separate graphs, draw the “original” production
possibility boundary (electronic goods on the horizontal axis, agricultural goods on the
vertical axis) and illustrate each of the following situations:
a. the country observes large increases in immigration;
b. there is a technological improvement in the production of military goods only;
c. a neighbouring country threatens to invade and the country responds by devoting more
resources to military goods.
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