Answered: Using a production possibilities…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Using a production possibilities frontier (PPF) diagram, determine how does a country’s PPF
change in response to the events described below.
Make sure to explicitly indicate what sectors you are representing, and what sort of
assumptions each event implies (i.e., a neutral effect vs a sector-biased effect). The latter
follows from your assumptions on the factor intensity of the sector you are representing.

a) Reducing skilled migration into the country
b) Imposing import taxes (tariffs) on intermediate inputs
c) Increasing the expenditure on research and development
d) An increase in the retirement age (providing greater flexibility in labour markets)
e) The effects of a natural disaster.

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