The production possibilities curve (PPC, or sometimes PPF for Production Possibilities Frontier) is the first graph that we study in microeconomics. Alpine Sports can thus produce 350 pairs of skis per month if it devotes its resources exclusively to ski production. c. A techno, Even though industrialized nations have been losing manufacturing jobs, our output keeps rising. D. growth provides an economic environment favorable to education and self-fulfillment. Suppose Alpine Sports expands to 10 plants, each with a linear production possibilities curve. increased tax-free allowance or cut to basic rate. There are 200 million unemployed people that work. b. An outward shift of a nation's production possibilities curve is equivalent to a: rightward shift of the nation's aggregate demand curve. B. a decrease in the size of the labor force. Course Hero is not sponsored or endorsed by any college or university. Which of the following is true in the long run given this information? A) What is full employment? Based on your own experience and reasoning, list 2 j, Which would be least likely to cause the production possibilities curve to shift to the right? Specialization implies that an economy is producing the goods and services in which it has a comparative advantage. Economic growth is the long-run trend of an increase in output over time, not just a temporary fluctuation in output or using previously underutilized resources. Donec aliquet. QUESTION 1 Exhibit 11-10 Labor and wage rate data Labor 6 7 8 9 10 Wage $12 13 14 15 16 2. Where will it produce them? Which of the following is not considered a source of increased labor efficiency? B) When an economy is at full employment, does that mean that unemployment is zero? The labour supply might also grow because of the impact of net inward migration of people of working age. Plant 1 can produce 200 pairs of skis per month, Plant 2 can produce 100 pairs of skis at per month, and Plant 3 can produce 50 pairs. An outward shift of a nation's production possibilities curve:Multiple Choice could reduce the nation's real GDP. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. In this example, production moves to point B, where the economy produces less food (FB) and less clothing (CB) than at point A. c. Lax labor laws. D. increased for unmarried women but decreased for married women. production possibilities curve Do technology improvements that allow firms to save on labor by reducing the amount of labor used per unit of output always reduce the industry demand for labor? It has two plants, Plant R and Plant S, at which it can produce these goods. The number of unemployed workers increases, c. A new technique improves the efficiency of extracti, Which of the following might help with structural unemployment? The greater the absolute value of the slope of the production possibilities curve, the greater the opportunity cost will be. Arightward(anoutward)shiftofanation'sproductionpossibilitiescurvecouldbecaused. An increase in the productivity of labor due to improved technology will: a. result in a lower wage. Movement from a point inside to a point outside of the production possibilities curve Which of the following is the most important source of US economic growth in the long run? unemployed) is called the: While even smaller than the second plant, the third was primarily designed for snowboard production but could also produce skis. LS23 6AD Since we have assumed that the economy has a fixed quantity of available resources, the increased use of resources for security and national defense necessarily reduces the number of resources available for the production of other goods and services. An increase in labor productivity. Total output but not employment or prices b. Slow growth rates of production and employment. What happens when production is inside the production possibilities curve? Suppose a prolonged recession increases the number of unemployed workers in the nation. c. Actual real GDP is, Which of the following is not one of the causes of stagnating real wages stagnating in the 1970s, according to Richard Wolff? Check all that apply. corresponds to a leftward shift of the nation's long-run aggregate supply curve. c. There is no involuntary unemployment. The negative slope of the production possibilities curve reflects the scarcity of the plants capital and labor. These intercepts tell us the maximum number of pairs of skis each plant can produce. If it is using the same quantities of factors of production but is operating inside its production possibilities curve, it is engaging in inefficient production. The firm then starts producing snowboards. The economy had moved well within its production possibilities curve. However, although investment is important for causing an outward shift of the PPF and contributing towards long-term economic growth, there are also some possible downsides to consider. But the production possibilities model points to another loss: goods and services the economy could have produced that are not being produced. b. downward shift of the nation's aggregate expenditure curve. In terms of the production possibilities curve in Figure 2.7 Spending More for Security, the choice to produce more security and less of other goods and services means a movement from A to B. Economists say that an economy has a comparative advantage in producing a good or service if the opportunity cost of producing that good or service is lower for that economy than for any other. The economy is in the peak phase of the business cycle. Ways of increasing the supply of labour available to an economy: Boston House, 2.3 Applications of the Production Possibilities Model, 4.2 Government Intervention in Market Prices: Price Floors and Price Ceilings, 5.2 Responsiveness of Demand to Other Factors, 7.3 Indifference Curve Analysis: An Alternative Approach to Understanding Consumer Choice, 8.1 Production Choices and Costs: The Short Run, 8.2 Production Choices and Costs: The Long Run, 9.2 Output Determination in the Short Run, 11.1 Monopolistic Competition: Competition Among Many, 11.2 Oligopoly: Competition Among the Few, 11.3 Extensions of Imperfect Competition: Advertising and Price Discrimination, 14.1 Price-Setting Buyers: The Case of Monopsony, 15.1 The Role of Government in a Market Economy, 16.1 Antitrust Laws and Their Interpretation, 16.2 Antitrust and Competitiveness in a Global Economy, 16.3 Regulation: Protecting People from the Market, 18.1 Maximizing the Net Benefits of Pollution, 20.1 Growth of Real GDP and Business Cycles, 22.2 Aggregate Demand and Aggregate Supply: The Long Run and the Short Run, 22.3 Recessionary and Inflationary Gaps and Long-Run Macroeconomic Equilibrium, 23.2 Growth and the Long-Run Aggregate Supply Curve, 24.2 The Banking System and Money Creation, 25.1 The Bond and Foreign Exchange Markets, 25.2 Demand, Supply, and Equilibrium in the Money Market, 26.1 Monetary Policy in the United States, 26.2 Problems and Controversies of Monetary Policy, 26.3 Monetary Policy and the Equation of Exchange, 27.2 The Use of Fiscal Policy to Stabilize the Economy, 28.1 Determining the Level of Consumption, 28.3 Aggregate Expenditures and Aggregate Demand, 30.1 The International Sector: An Introduction, 31.2 Explaining InflationUnemployment Relationships, 31.3 Inflation and Unemployment in the Long Run, 32.1 The Great Depression and Keynesian Economics, 32.2 Keynesian Economics in the 1960s and 1970s, 32.3. If more workers join the labor force of a country, the unemployment rate tends to _______. Further, the economy must make full use of its factors of production if it is to produce the goods and services it is capable of producing. D. is detrimental to economic growth. Its resources were fully employed; it was operating quite close to its production possibilities curve. Then find (c) the amount by which the ordinary interest is larger. Customer perspective. The fact that the opportunity cost of additional snowboards increases as the firm produces more of them is a reflection of an important economic law. c. An increase in the unemployment rate. Producing a snowboard in Plant 3 requires giving up just half a pair of skis. a. more fluid labor markets b. worker retraining c. more technological change d. none of the above, Which of the following is most likely to lead to sustained long-run growth? (2 points) Fireworks for everyone in their sightline A toll road A glass of water Seats at a movie theater An unclaimed spot on a beach Which, 1.08 Basic Economic Concepts Q. Because technological innovati, Which of the following reasons could explain why an economy would be operating inside its production possibilities curve (PPC)? That means that if the full employment output increases (in other words, moves to the right along the horizontal axis), then the LRAS curve shifts to the right: Figure 2: Economic growth in the AD-AS model, Posted 4 years ago. Choose all that apply A. And what are some examples of new technologies that have created jobs? The table shows the combinations of pairs of skis and snowboards that Plant 1 is capable of producing each month. can have devastating effects on a country. The creation of national unemployment offices to increase the information about jobs. b. Because the production possibilities curve for Plant 1 is linear, we can compute the slope between any two points on the curve and get the same result. Now suppose Alpine Sports is fully employing its factors of production. Now suppose the firm decides to produce 100 snowboards. Join us in London, Birmingham, Bristol or Portsmouth for a Grade Booster Cinema Workshop and smash your exams this summer! A decrease in growth rates will cause: A. no shift of an economy's production possibilities curve B. an outward shift of an economy's production possibilities curve C. a movement from a point inside a; The potential output of an economy is: A. the output level at which nominal GDP is equal to real GDP. They continued to fall for several years. How many calculators will it be able to produce? Plant 3, though, is the least efficient of the three in ski production. If the firm were to produce 100 snowboards at Plant 3, ski production would fall by 50 pairs per month (recall that the opportunity cost per snowboard at Plant 3 is half a pair of skis). b. A. A. a major tech. We will generally draw production possibilities curves for the economy as smooth, bowed-out curves, like the one in Panel (b). The plant with the lowest opportunity cost of producing snowboards is Plant 3; its slope of 0.5 means that Ms. Ryder must give up half a pair of skis in that plant to produce an additional snowboard. Figure 2.4 Production Possibilities at Three Plants shows production possibilities curves for each of the firms three plants. If it fails to do that, it will operate inside the curve. (Consider This) Rising wages for women in the United States have increased: A.Still on its PPC Donec aliquet. Which of the following would most likely shift the production possibilities curve inward? A production possibilities curve shows the combinations of two goods an economy is capable of producing. The production of both goods rises. One way the PPF can shift outwards is if there is an increase in the active labour supply. some examples of questions that can be answered using that model. could increase the nation's real GDP, but not the real-. A production possibilities curve is a graphical representation of the alternative combinations of goods and services an economy can produce. Which of the following is not predicted by the technology shock driven real business cycle (RBC) theory? O ensures the nation of an increase in real GDP per capita. The number of unemployed persons decreased by a smaller percentage than the labor force declined. With all three plants producing only snowboards, the firm is at point D on the combined production possibilities curve, producing 300 snowboards per month and no skis. C. a movement from a point on to a point inside a production possibilities curve. Which one of the following people is frictionally unemployed? O corresponds to a leftward shift of the nation's long-run aggregate supply curve. Improved methods of production c. An increase in the education and training of the labor force d. A decrease in unempl, Which of the following shifts the production possibilities frontier outward?