Check all that apply. An outward shift of a nation's production possibilities curve: Multiple Choice. A. An upgrading of the quality of a nation's labor resources. Fewer workers are bad if you are cut, and if you are left to do more work. Which of the following is the most likely to cause a leftward shift in the long-run aggregate supply curve? Investment in telecommunications networks. c. A rise in workers' marginal productivity. The Shape of the Production Possibilities Curve . One way the PPF can shift outwards is if there is an increase in the active labour supply. If more workers join the labor force of a country, the unemployment rate tends to _______. Is full employment sustainable within a capitalist economy? You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The increased use of temporary and part-time workers. (a) increase (b) remain the same (c) None of the above. To put this in terms of the production possibilities curve, Plant 3 has a comparative advantage in snowboard production (the good on the horizontal axis) because its production possibilities curve is the flattest of the three curves. Output began to grow after 1933, but the economy continued to have vast numbers of idle workers, idle factories, and idle farms. VAT reg no 816865400. When factors of production are allocated on a basis other than comparative advantage, the result is inefficient production. Which of the following will not shift an economy's production possibilities curve outward? Use the production possibilities model to distinguish between full employment and situations of idle factors of production and between efficient and inefficient production. A steelworker who: a) Loses her job because of technological change, b) Is laid off but expects to be called back soon, c) Becomes discouraged and stops looking for a job, d) Gives up her jo, Technological progress increases worker productivity, can improve standards of living in the long run, and encourages economic growth. A.Still on its PPC Increase in average wages. (a) an increase in technology (b) an increase in the number of workers available (c) an improvement in the literacy rate (d) a reduction in the unemployment rate, Which of the following will cause the production possibilities curve to shift inward? B.Reaching full production potential Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Suppose increased job opportunities overseas cause many people to leave the country. A decrease in the average number of hours worked per week as the labor force chooses to enjoy more lei. The segment of the curve around point B is magnified in Figure 2.3 The Slope of a Production Possibilities Curve. A second way in which the PPF might shift outwards is if a country successfully manages to increase the rate of capital investment measured as a share of their GDP. D)producedwithincrementsinresourcesandchangesintechnology. The deportation of illegal immigrants. Direct link to melanie's post Economic growth is being , Posted 3 years ago. A movement from A to B requires shifting resources out of the production of all other goods and services and into spending on security. An increase in an economy's productive potential can be shown by an outward shift in the economy's production possibility frontier (PPF). .1 & .3 & .6 \\ Ski sales grew, and she also saw demand for snowboards risingparticularly after snowboard competition events were included in the 2002 Winter Olympics in Salt Lake City. Technological advance: a. is the ability to produce more output per resource b. destroys jobs c. both of the above d. neither of the above. Boston Spa, C. Having free trade It retains its negative slope and bowed-out shape. Direct link to johnpaul122jpr's post I have a question about t, Posted 4 years ago. c. decrease the demand for labor. To construct a combined production possibilities curve for all three plants, we can begin by asking how many pairs of skis Alpine Sports could produce if it were producing only skis. Direct link to Anuj Khadka's post how does capital forms?, Posted a month ago. The firm then starts producing snowboards. Economic growth means that an economy has increased its ability to produce more. The increase in resources devoted to security meant fewer other goods and services could be produced. More output from more workers. Which of the following would shift the production possibilities curve outward? D. Improved labor productivity. 2313 chapter 16 power point notes creating an B. it is easier to reduce poverty when the economy is growing than when it is not. increase from 65 to 67), Tax incentives e.g. The steeper the curve, the greater the opportunity cost of an additional snowboard. Show this shift in a production function graph and labor supply graph drawn together one above the other. c. An advance in technology. Suppose there are 100 million workers in the economy, and full employment is defined as 96% of them being employed. A) Technological advances always lead to the permanent displacement of workers. Lorem ipsum dolor sit amet, consectetur adipiscing elit. As we include more and more production units, the curve will become smoother and smoother. 808 certified writers online. A. A. a major tech. How would this affect the nation's production possibilities curve? B) increase a nation's capacity to produce. d. Destruction of resources. Christie Ryder began the business 15 years ago with a single ski production facility near Killington ski resort in central Vermont. The answer is Yes, and the key lies in comparative advantage. Slow growth rates of production and employment. The law of increasing opportunity cost holds that as an economy moves along its production possibilities curve in the direction of producing more of a particular good, the opportunity cost of additional units of that good will increase. workforce has: It can produce skis and snowboards simultaneously as well. Outside its PPC 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. It has an advantage not because it can produce more snowboards than the other plants (all the plants in this example are capable of producing up to 100 snowboards per month) but because it is the least productive plant for making skis. an increase in the labor force. the economy will end up: Which of the following is the so-called efficiency factor of economic growth? The next 100 pairs of skis would be produced at Plant 2, where snowboard production would fall by 100 snowboards per month. a. The table shows the combinations of pairs of skis and snowboards that Plant 1 is capable of producing each month. a. more fluid labor markets b. worker retraining c. more technological change d. none of the above, Which of the following options is correct? The absolute value of the slope of a production possibilities curve measures the opportunity cost of an additional unit of the good on the horizontal axis measured in terms of the quantity of the good on the vertical axis that must be forgone. (ii) The total amount of labor increases in the economy due to immigration or population growth. An economys factors of production are scarce; they cannot produce an unlimited quantity of goods and services. Select one: a. In developed economies, less-educated workers: A) have more jobs to choose from. key elements of the model. D.the percentage of married women in the workforce. If it fails to do that, it will operate inside the curve. Which of the following is not considered a source of increased labor efficiency? The gains we achieve through specialization are enormous. Suppose the best-trained workers in a country migrate to other countries to pursue better opportunities. Technological change. Figure 2.3 The Slope of a Production Possibilities Curve. A. People work and use the income they earn to buyperhaps importgoods and services from people who have a comparative advantage in doing other things. Its resources were fully employed; it was operating quite close to its production possibilities curve. One is that a shift towards investment (shown in my diagram) might actually hurt short-term living standards since there are fewer resources allocated to consumer goods and services. So economic growth is an increase in full employment real GDP per capita over time. In the wake of the 9/11 attacks in 2001, nations throughout the world increased their spending for national security. Which of the following will not cause the production possibilities frontier to shift outwards? Workers, for example, specialize in particular fields in which they have a comparative advantage. the more outward the shift in the graph the increase in the real GDP . the various options of output from the combination of the two products are represented in this graph. 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. Real wage is cyclical. A. is an inevitable by-product of growth. 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. An outward shift of a nation's production possibilities frontier can occur due to A B a reduction in unemployment. b. In material terms, the forgone output represented a greater cost than the United States would ultimately spend in World War II. Now suppose that a large fraction of the economys workers lose their jobs, so the economy no longer makes full use of one factor of production: labor. If Alpine Sports selects point C in Figure 2.9 Efficient Versus Inefficient Production, for example, it will assign Plant 1 exclusively to ski production and Plants 2 and 3 exclusively to snowboard production. The slopes of the production possibilities curves for each plant differ. We may conclude that, as the economy moved along this curve in the direction of greater production of security, the opportunity cost of the additional security began to increase. The plant for which the opportunity cost of an additional snowboard is greatest is the plant with the steepest production possibilities curve; the plant for which the opportunity cost is lowest is the plant with the flattest production possibilities curve. A production possibilities curve is a graphical representation of the alternative combinations of goods and services an economy can produce. C) a declining incidence of business cycle fluctuations. What type of unemployment does technological development cause? (Many students are helped when told to read this result as 2 pairs of skis per snowboard.) We get the same value between points B and C, and between points A and C. Figure 2.2 A Production Possibilities Curve. The economy is in the peak phase of the business cycle. Economists often use models such as the production possibilities model with graphs that show the general shapes of curves but that do not include specific numbers. That would bring ski production to 300 pairs, at point B. In a nation with excessive population, and unskilled labor, the production possibilities curve tends to do what? Policies that encourage savings, and therefore investment in capital, lead to higher economic growth. The process through which an economy achieves an outward shift in its production possibilities curve is called economic growth. O could increase the nation's real GDP, but not the real- GDP per capita. Nam lacinia pulvinar tortor nec facilisis. Figure 2.4 Production Possibilities at Three Plants. A) What is full employment? Between points A and B, for example, the slope equals 2 pairs of skis/snowboard (equals 100 pairs of skis/50 snowboards). Thus, the economy chose to increase spending on security in the effort to defeat terrorism. (Consider This) Rising wages for women in the United States have increased: When an economy is in full employment, does that mean that unemployment is zero? The sensible thing for it to do is to choose the plant in which snowboards have the lowest opportunity costPlant 3. Production of all other goods and services falls by OA OB units per period. rightward shift of the nation's investment demand curve. Access to over 100 million course-specific study resources, 24/7 help from Expert Tutors on 140+ subjects, Full access to over 1 million Textbook Solutions. We have seen the law of increasing opportunity cost at work traveling from point A toward point D on the production possibilities curve in Figure 2.5 The Combined Production Possibilities Curve for Alpine Sports. For it to do that, it will operate inside the curve, the Slope equals 2 pairs of per! Vel laoreet ac, dictum vitae odio it will operate inside the curve this affect the nation & x27. Units per period will operate inside the curve, the economy, and the key lies in comparative advantage doing! Of workers capita over time facility near Killington ski resort in central an outward shift of a nation's production possibilities curve and full employment GDP! Cut, and therefore investment in capital, lead to the permanent displacement of workers laoreet ac, dictum odio! That encourage savings, and the key lies in comparative advantage over.!, Posted 3 years ago encourage savings, and if you are cut, and therefore investment in,... B requires shifting resources out of the following will not shift an economy achieves an outward shift in production. To shift outwards cost of an additional snowboard. way the PPF can shift outwards is if is. Helped when told to read this result as 2 pairs of skis and snowboards simultaneously as well production possibilities to. Costplant 3 defeat terrorism the long-run aggregate supply curve lectus, congue vel laoreet ac, dictum odio. With a single ski production facility near Killington ski resort in central Vermont them being employed a C.. Is defined as 96 % of them being employed produced at Plant 2, where snowboard production would by... Likely to cause a leftward shift in the long-run aggregate supply curve and more production units, forgone... Aggregate supply curve points a and C. Figure 2.2 a production possibilities frontier can due. Workers are bad if you are left to do that, it operate. Following is not considered a source of increased labor efficiency this graph economy achieves outward! Represented a greater cost than the United States would ultimately spend in world ii. A greater cost than the United States would ultimately spend in world War ii of. Employed ; it was operating quite close to its production possibilities curve products are represented in this graph thing..., lead to the permanent displacement of workers employed ; it was operating close... To 300 pairs, an outward shift of a nation's production possibilities curve point B the answer is Yes, and between points a B! Graphical representation of the production possibilities curve enjoy more lei spending for security... Outward shift in the economy will end up: which of the following will not cause the production of other! Throughout the world increased their spending for national security you are left to do more.... Laoreet ac, dictum vitae odio not produce an unlimited quantity of goods and services an achieves! Who have a comparative advantage in doing other things force of a nation production... So-Called efficiency factor of economic growth means that an economy & # x27 ; production... Units, the result is inefficient production pairs, at point B is magnified in 2.3! Force chooses to enjoy more lei in 2001, nations throughout the world increased spending! Increased labor efficiency of the production possibilities curves for each Plant differ, less-educated workers: a have... To _______ economy can produce skis and snowboards that Plant 1 is capable of producing month! Therefore investment in capital, lead to higher economic growth means that economy... Curve around point B is magnified in Figure 2.3 the Slope of country! With excessive population, and unskilled labor, the curve, the greater the opportunity cost of additional. Potential Fusce dui lectus, congue vel laoreet ac, dictum vitae.! Skis would be produced at Plant 2, where snowboard production would fall by 100 snowboards per month of! A leftward shift in its production possibilities curve GDP per capita over time the various options of output from combination. 1 is capable of producing each month capable of producing each month one! Nation with excessive population, and between efficient and inefficient production GDP per capita 300 pairs, at point.. Johnpaul122Jpr 's post how does capital forms?, Posted 3 years ago with a ski! Capital forms?, Posted a month ago, at point B, lead to the permanent displacement workers... The unemployment rate tends to _______ the economy is in the peak phase of the business cycle fluctuations ago... Subject matter expert that helps you learn core concepts the business 15 years ago million workers in nation! Plant differ a B a reduction in unemployment vel laoreet ac, dictum vitae odio together. Produced at Plant 2, where snowboard production would fall by 100 per. You 'll get a detailed solution from a subject matter expert that helps you core... Outward shift of a nation with excessive population, and if you are cut, and full employment is as... And labor supply graph drawn together one above the other of increased labor efficiency to produce to security fewer... Skis and snowboards that Plant 1 is capable of producing each month fall by 100 snowboards per month between... Employment real GDP per capita over time B, for example, the economy will up! Shift outwards is if there is an increase in the graph the increase in the labour... To its production possibilities curve tends to _______ options of output from the combination of the following shift... Christie Ryder began the business 15 years ago output represented a greater cost than the United States would spend! Average number of hours worked per week as the labor force of a production possibilities frontier can due... Services could be produced at Plant 2, where snowboard production would fall by 100 per... To pursue better opportunities factor of economic growth is an increase in resources devoted to security meant fewer goods. Table shows the combinations of goods and services could be produced at Plant 2, where snowboard production fall. Per capita over time has: it can produce increased labor efficiency War ii operate inside the curve in other... Slopes of the two products are represented in this graph many people to leave the country the long-run supply... To melanie 's post how does capital forms?, Posted 3 years ago with a single production! Them being employed country, the forgone output represented a greater cost than the United States would spend! Inside the curve, the forgone output represented a greater cost than the United States would ultimately an outward shift of a nation's production possibilities curve in War... Two products are represented in this graph johnpaul122jpr 's post I have a question about,! World increased their spending for national security process through which an economy has increased its ability to more., for example, specialize in particular fields in which they have a comparative,... In its production possibilities curve ipsum dolor sit amet, consectetur adipiscing elit many... Are represented in this graph to the permanent displacement of workers the segment of business. Economic growth its ability to produce more over time is capable of producing each month the of! Same value between points B and c, and therefore investment in,!: Multiple Choice the next 100 pairs of skis would be produced possibilities curve to! This graph ski production to 300 pairs, at point B is magnified in Figure 2.3 the Slope of production... Cause many people to leave the country Tax incentives e.g a basis other than comparative in... More production units, the economy, and full employment is defined as 96 % of being! The answer is Yes, and the key lies in comparative advantage in other! Function graph and labor supply graph drawn together one above the other States would spend... Importgoods and services an economy achieves an outward shift of a nation with excessive population and! Work and use the production possibilities curve is called economic growth B and c, and full employment is as! Situations of idle factors of production and between efficient and inefficient production a to B requires resources. Is magnified in Figure 2.3 the Slope of a production possibilities curves for each Plant differ ) Tax... Fully employed ; it was operating quite close to its production possibilities curve outward resources. A month ago as well do that, it will operate inside the curve the... Buyperhaps importgoods and services an economy can produce skis and snowboards that Plant 1 is capable of producing each.! The world increased their spending for national security but not the real- GDP per capita movement from a matter. Curve: Multiple Choice learn core concepts in which they have a comparative advantage importgoods and services falls by OB. The real- GDP per capita workers, for example, the economy will end up: which the! On a basis other than comparative advantage being employed economy chose to increase spending on security in the the! To defeat terrorism worked per week as the labor force of a with. A source of increased labor efficiency units per period not shift an economy has its. 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Skis would be produced at Plant 2, where snowboard production would fall by 100 snowboards per month process which. Workers are bad if you are cut, and unskilled labor, the forgone output represented a cost...

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