Use a diagram to illustrate how economic growth is shown

Reference no: EM13172274

Lesson 2: Production Possibilities - Written Assignment 2

1. Suppose that a nation's production possibilities are as follows:

Possibilities	Food (millions of tons per year)	Tractors (millions per year)
A	0	30
B	4	28
C	8	24
D	12	20
E	16	14
F	20	8
G	24	0

a. Is it possible for this nation to produce thirty million tons of food per year? Why or why not.

b. Is it possible for this nation to produce thirty million tractors per year? Why or why not.

c. Suppose this society produces twenty million tons of food and six million tractors per year. Is it operating on its production possibilities frontier?

d. What factors might cause this nation to produce at a point within its production possibilities frontier?

2. Plot the production possibilities frontier in Question 1 on a graph. Measure food along the horizontal axis and tractors along the vertical axis. Answer the following questions.

a. At what point along the horizontal axis does the PPF curve cut the axis?

b. At what point along the vertical axis does the PPF curve cut the axis?

3. Suppose that the nation with the initial PPF given in the table enjoys a technological breakthrough that enables it to double the production of tractors at each level of food production.

a. Plot the new production possibilities frontier.

b. Is this nation on its new production possibilities frontier if it produces 16 million tractors and 20 million tons of food?

c. At what point along the horizontal axis does the PPF curve cut the axis?

d. At what point along the vertical axis does the PPF curve cut the axis?

4. Use a diagram to illustrate how economic growth is shown using a production possibilities frontier.

Reference no: EM13172274

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