Concept explainers
(a)
Changes in U.S
(a)

Explanation of Solution
A war taken place in the US soil leads to reduction in capital stock, potential resources and also kills people. This in turn shifts the US’s PPF inward.
Production possibilities frontier (PPF) curve: PPF curve refers to the combinations of goods and services that can be produced using available resources.
(b)
Changes in U.S PPF.
(b)

Explanation of Solution
The discovery of new oil field increases the US’s resources. Thus, it shifts the PPF of U.S outward.
Production possibilities frontier (PPF) curve: PPF curve refers to the combinations of goods and services that can be produced using available resources.
(c)
Changes in U.S PPF.
(c)

Explanation of Solution
Decreasing
Production possibilities frontier (PPF) curve: PPF curve refers to the combinations of goods and services that can be produced using available resources.
(d)
Changes in U.S PPF.
(d)

Explanation of Solution
The new law decreases the productive efficiency of the labor that leads to the movement of a point which is on the frontier to the point that is inside the frontier.
Production possibilities frontier (PPF) curve: PPF curve refers to the combinations of goods and services that can be produced using available resources.
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Chapter 2 Solutions
MICROECONOMICS-MINDTAP (1 TERM)
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