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Homework answers / question archive / Suppose massive new sources of oil and coal are found within the economy and there are major technological innovations in both sectors of the economy
Suppose massive new sources of oil and coal are found within the economy and there are major technological innovations in both sectors of the economy. Which curve in the diagram would renresent the new production possibility curve? (Indicate the curve you choose with two letters.) _CCL 9. Suppose that a new government comes into power that forbids the use of automated machinery and modern production techniques in all industries. Which curve in the diagram would represent the new production possibility curve? (Indicate the curve you choose with two letters.) 10. Suppose there is a major technological breakthrough in ONLY the consumer goods industry, and the new technology is widely adopted. Which curve in the diagram would represent the new production possibilities curve? (Indicate the curve you choose with two letters.) 11. If BB' represents a country's current production possibilities frontier, what can you say about a point like x? (Write a brief statement.) 12. If BB' rep Jesents a country's current production possibility frontier, what can you say about a point like y? (Write a brief statement.)
Q8) The answer is curve CC as the technological improvement will increase the production of both goods and the PPC curve will shift outwards.
Q9) The answer is curve AA as the technological slowdown will decrease the production of both goods and the PPC curve will shift inwards.
Q10) The answer is curve BD as a technological breakthrough in only consumer goods will only increase the production of consumer goods and not capital goods and thus the PPC will rotate around CC.
Q11) Point x is an infeasible point as it is outside the PPC curve, Given the current resources, this level of production can not be achieved when the resources are employed efficiently.
Q12) Point y is an inefficient points as it is inside the PPC curve, Given the current resources, more can be produced and at Y, resources are not being used to their full potential.
