Each question weighs equally and the total will be counted out of 100 5) [PP.e]

Question

Each question weighs equally and the total will be counted out of 100 5) [PP.e] What could have caused the upward shift of the production possibilities frontier (PPF) 800 55 100 1300 Consumer goods a) A roduction in the total labor force in all sectors of the economy b) A modernization of the technology available for production of capital goods An increase in the efficiency of production of consumer goods An increase in the total capital stock in all sectors of the economy c) d) e) All of the above [PP,d] why is the PPF bowed (instead of linear)? because there is an increasing marginal opportunity cost of producing both goods … because there is a decreasing marginal opportunity cost of producing both goods … because consumers prefer consumer goods to capital goods ...because demand for capital goods is higher than demand for consumer goods a) b) c) d) 7) [PP.c] As this country moves from point D to point B along the production possibility frontier AE, 800-. 55 1,100 1.300 Consumer goods a) the opportunity cost of producing more of either consumer goods or capital goods rises. b) the opportunity cost is not affected because the curve does not shift. c) the opportunity cost of building more capital goods rises. d) the opportunity cost of building more consumer goods rises. e) None of the above

Explanation / Answer

5 modernisation in technology of capital goods. Note intercept on consumer axis doesn't change

6 because there is increasing marginal opportunity cost of both goods

7 the opportunity cost of building more capital goods rises

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