QuickWrite Question

Figure 3-11: Production Possibilities and Circular-Flow Diagram

• Coconuts are Capital Goods
• Fish are Consumer Goods

Use the "Production Possibilities and Circular-Flow Diagram"Figure 3-11. Assume the figures represent the same economy.

1.The economy is currently producing at point C. -Define the status of the economy

2.The economy moves from point C to point B. -Define what actions took place in order for the point of production to move from C to B.? Use the Circular Flow to explain your answer.

3. The Market (at point B) now desires to consume more coconuts than fish. How will the market (Free Market) coordinate this movement to a new output position. What are the costs of the move.

4. Will the movement from point B to point A help the country reach its goal of one day producing at point D? What other suggestions do you have for the country to reach an output of point D?

This requires four separate responses.

Total Word Count for all four questions = 200+

Quantity of coconuts Money Households Money 35 D 30 A Goods Factors 25 and B 20 services 15 Markets for Factor 10 goods and markets services 5 Goods 0 10 20 30 40 50 and Quantity of fish services Factors Money Firms Money