We are supposed to create a PPF with manufactured goods on the y axis and agricultural goods on the x axis. The question I'm having trouble with is: Congress is currently considering a new immigration policy that would allow people with the entrepreneurial skills and the money to start new businesses permission to emigrate to the U.S. if they start a business in this country that employs at least 5 U.S. workers. Show how you would represent the impact of this policy on the U.S. Explain briefly why you believe your picture changes in the way you illustrated.
We are supposed to create a
The production possibility frontier of an economy is a model that illustrates the total output that the economy can possibly produce, given that it employs all of its available resources in the most productive manner.
The inflow of entrepreneurs into the US economy will improve the number of resources available in the US economy. As a result, the production possibility frontier will move outwards as the economy's productive capacity has increased.
The inflow of new entrepreneurs will increase productivity since new factors of production are now operating in the US economy; thus, the potential output that the economy can produce has increased. The PPF will shift outwards to account for this change as the economy can now produce a higher potential output.
This has been illustrated below; there is a move from PPFA to PPFB:
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