Come up with as many different ways as you can to explain how the quality or the quantity of an economy's factors of production could be increased or improved.
Now imagine that you represent the government of your country.
Explain what policies you could adopt to increase the production possibilities for your country.
What possible limitations would you face in putting your policies into action?

1. Consider a hypothetical economy which produces only two types of output -
consumer goods [goods used by consumers) and capital goods [goods used by producers). Because resources are scarce, they cannot produce as much of each of these as they would like. The following table illustrates the possible combinations of consumer goods and capital goods that can be produced.

a) Draw a diagram to illustrate the economy's production possibilities curve.

b) Use values from the table or the diagram to explain the concept of opportunity cost.

c) On your diagram, add a point "F" that is inside the curve. Describe how the economy is using its resources at point F.

d) On your diagram, add a point "G"that is beyond the curve. Explain why this point is currently not attainable.

e) Explain what would have to happen for the economy to reach point G.
2. Using a [new) PPC diagram, explain what would happen if an economy experienced a devastating natural disaster. Be sure to explain your reasoning.

Transcribed Image Text:

Combination A B C D E Consumer goods (units) Capital goods [units] 0 200 50 100 150 200 180 150 100 0