Question
Consider an economy that can produce two goods: cars and robots. Robots are capital goods and useful for many reasons, one of which is their
Consider an economy that can produce two goods: cars and robots. Robots are capital goods and useful for many reasons, one of which is their ability to help in the production of cars. A. Draw a Productions Possibilities Frontier (Cars on the Y axis, Robots on the X axis) indicating that production is characterized by increasing marginal opportunity cost. Label the PPF curve year 1. B Imagine that a new oil deposit has been discovered making production of both cars and robots much easier. On the same graph, draw a new PPF, label this PPF year 2. C. In an effort to expand the PPF once more, the government decides to provide its people with incentives to accumulate capital. Draw a third PPF (labeled year 3) that would result from this allocation of production in year 2. D. Place an X on year 3's PPF that would represent an efficient allocation of resources.
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