### 1. Specialization and Production Possibilities**Suppose Italy produces only scooters and pressure cookers.** The resources that are used in the production of these two goods are specialized—that is, some resources are better suited for producing scooters than pressure cookers, whereas others are better suited for producing pressure cookers than scooters.The shape of Italy's production possibilities frontier (PPF) should reflect the fact that as Italy produces more pressure cookers and fewer scooters, the opportunity cost of producing each additional pressure cooker (decreases/increases/remains constant).The following graphs show two possible PPFs for Italy's economy: a straight-line PPF ($PPF_1$) and a bowed-out PPF ($PPF_2$).#### Graph Description:- **Graph 1:** - Title: PPF1 - Axes: The vertical axis represents Scooters; the horizontal axis represents Pressure Cookers. - Characteristics: This is a straight-line PPF, suggesting a constant opportunity cost in the production of scooters and pressure cookers.- **Graph 2:** - Title: PPF2 - Axes: The vertical axis represents Scooters; the horizontal axis represents Pressure Cookers. - Characteristics: This is a bowed-out PPF, indicating that the opportunity cost of producing pressure cookers increases as more pressure cookers are produced and fewer scooters are produced.Based on the previous description, the trade-off Italy faces between producing pressure cookers and scooters is best represented by (a graph showing the correct PPF). By understanding these graphs, we can learn about the opportunity costs associated with the specialization and allocation of resources in the production of different goods within a nation's economy. ### 1. Specialization and Production PossibilitiesSuppose Italy produces only scooters and pressure cookers. The resources that are used in the production of these two goods are specialized—that is, some resources are better suited for producing scooters than pressure cookers, whereas others are better suited for producing pressure cookers than scooters.The shape of Italy's production possibilities frontier (PPF) should reflect the fact that as Italy produces more pressure cookers and fewer scooters, the opportunity cost of producing each additional pressure cooker _________.The following graphs show two possible PPFs for Italy's economy: a straight-line PPF ($ PPF_1 $) and a bowed-out PPF ($ PPF_2 $).#### Graph Descriptions**Graph 1:**- Label: $ PPF_1 $- Shape: Straight-line PPF- Axes: Scooters (vertical axis) and Pressure Cookers (horizontal axis)**Graph 2:**- Label: $ PPF_2 $- Shape: Bowed-out PPF- Axes: Scooters (vertical axis) and Pressure Cookers (horizontal axis)Based on the previous description, the trade-off Italy faces between producing pressure cookers and scooters is best represented by _______.

The PPF is typically depicted as a curve on a two-dimensional graph, with one good or service…

Suppose Italy produces only scooters and pressure cooker The resources that are used in the production of these two goods are specialized-that is, some resources are better suited for producing scooters than pressure cookers, whereas others are better suited for producing pressure Cookers than scooters.

Suppose Italy produces only scooters and pressure cooker The resources that are used in the production of these two goods are specialized-that is, some resources are better suited for producing scooters than pressure cookers, whereas others are better suited for producing pressure Cookers than scooters.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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