Penguin Island produces capital goods and consumption goods. Its economy has experienced growth....

Question:

Penguin Island produces capital goods and consumption goods. Its economy has experienced growth. In this case, growth means the same percentage increase in both goods. Show this growth in relation to the Production Possibilities Frontier below by moving each of the individual points accordingly.

Production possibility frontier:

  • Production possibility Frontier shows the different combination of two goods that can be produced with the given resources ,holding technology constant.PPF curve is concave in shape due to the increasing marginal rate of transformation.

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(Answer)

  • It is given in the question that due to the economic growth in the region the production of goods increases.
  • In this case, there would be a...

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Shifts in the Production Possibilities Curve

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Chapter 1 / Lesson 5
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The production possibilities frontier model illustrates for a nation's leaders what goods to produce, how to produce them, and for what markets. Explore how shifts in the economy lead to shifts in the production possibilities curve of a country using real-world examples.


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