6a). What point(s) would represent a combination of DVD Players and MP3 Players
ID: 1188057 • Letter: 6
Question
6a). What point(s) would represent a combination of DVD Players and MP3 Players that cannot be produced given the production possibilities frontier shown in the above diagram? Explain your answer.
6b). What point(s) represent a combination of DVD Players and MP3 Players that might be produced if the economy represented by the production possibilities frontier in the above diagram were experiencing unemployment? Explain your answer.
6c). What factors determine the rate of long-run economic growth?
Explanation / Answer
6a) Combination E. E lies outside of the budget constraint line, and thus cannot be produced given the production possibilities frontier shown.
b)If the economy above were experiencing unemployment, then bundle D would have to be produced. Less labor means a smaller production possibility frontier, so the bundle A, B, and C will no longer be possible. E was never possible.
c) Long run economic growth depends largely on rising productivity. To increase productivity per worker, you must increase more capital per worker, more human capital per worker (education, training), and better technology. Long run economic growth will also depend on whether or not natural resources can sustain this growth, and whether or not the growth's impact on the environment will prevent future growth.
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