C)producingmoreconsumerandfewercapitalgoods. Suppose a prolonged recession increases the number of unemployed workers in the nation. Could the given matrix be the transition matrix of a Markov chain? When factors of production are allocated on a basis other than comparative advantage, the result is inefficient production. Explain the reasons for the scarcity of labor. The increase in resources devoted to security meant fewer other goods and services could be produced. a. the exploitation of natural resources b. technological change c. transfer of workers from agricultural to industrial sectors d. increases in the labor participation rate, Which would be least likely to cause the production possibilities curve to shift to the right? Because technological innovat. A. increased in spite of declining wages for women. We will generally draw production possibilities curves for the economy as smooth, bowed-out curves, like the one in Panel (b). While even smaller than the second plant, the third was primarily designed for snowboard production but could also produce skis. A. The opportunity cost of skis at Plant 2 is 1 snowboard per pair of skis. The production possibilities curves for the two plants are shown, along with the combined curve for both plants. When an economy is operating on its production possibilities curve, we say that it is engaging in efficient production. Put calculators on the vertical axis and radios on the horizontal axis. The number of unemployed workers increases, c. A new technique improves the efficiency of extracti, Which of the following might help with structural unemployment? In Plant 2, she must give up one pair of skis to gain one more snowboard. In radios? Show the impact that a decrease in the capital stock would have on the LRAS of an economy. the more outward the shift in the graph the increase in the real GDP . Donec aliquet. The absolute value of the slope of a production possibilities curve measures the opportunity cost of an additional unit of the good on the horizontal axis measured in terms of the quantity of the good on the vertical axis that must be forgone. Does technological change create unemployment? When automation removes most of the jobs which ideology will work best: Capitalism, Socialism, or Egalitarianism? B. employment-population ratio. Technological advance: a. is the ability to produce more output per resource b. destroys jobs c. both of the above d. neither of the above. Our experts can answer your tough homework and study questions. b. b. d. A law that reduces the, Which of the following are likely to lead to economic growth? A decrease in the average number of hours worked per week as the labor force chooses to enjoy more lei. An outward shift of a nation's production possibilities curve is equivalent to a rightward shift of the nation's long-run aggregate supply curve. We shall consider two goods and services: national security and a category we shall call all other goods and services. This second category includes the entire range of goods and services the economy can produce, aside from national defense and security. How many jobs were lost, as a result, in a labor force of 175 million? However, the extent to which a growing population leads to improved living standards and sustainable development is open to question. Clearly not. A rise in the wage rate. The table in Figure 2.2 A Production Possibilities Curve gives three combinations of skis and snowboards that Plant 1 can produce each month. a. an increase in labor b. an increase in capital c. an advance in technology d. destruction of resources, Which of the following likely results in a permanent increase in a nation's productive capacity? In that case, it produces no snowboards. How do you think you might measure the net impact of technological change on overall employment and GDP in, In 2013 the unemployment rate was 7.4 percent, far above the full-employment threshold (5%). Points on the production possibilities curve thus satisfy two conditions: the economy is making full use of its factors of production, and it is making efficient use of its factors of production. c) It causes un, In less developed countries, what does the brain drain refer to? Economic growth is being able to make more things. Clearly, the transfer of resources to the effort to enhance national security reduces the quantity of other goods and services that can be produced. C. an increase in the skills of the labor force. C. Inside its PPC b. If the firm wishes to increase snowboard production, it will first use Plant 3, which has a comparative advantage in snowboards. 2002-2023 Tutor2u Limited. How does technological progress shift the labor demand curve? An economy grows when it has the capacity to produce more. Tel: +44 0844 800 0085. B. Technological change. Its resources were fully employed; it was operating quite close to its production possibilities curve. If the average worker produce, Which of the following would lead to a lower unemployment rate? Producing more snowboards requires shifting resources out of ski production and thus producing fewer skis. B. a larger number of employees. An increase in the saving rate. Then find (c) the amount by which the ordinary interest is larger. In drawing production possibilities curves for the economy, we shall generally assume they are smooth and bowed out, as in Panel (b). Producing 100 snowboards at Plant 2 would leave Alpine Sports producing 200 snowboards and 200 pairs of skis per month, at point C. If the firm were to switch entirely to snowboard production, Plant 1 would be the last to switch because the cost of each snowboard there is 2 pairs of skis. Notice that this production possibilities curve, which is made up of linear segments from each assembly plant, has a bowed-out shape; the absolute value of its slope increases as Alpine Sports produces more and more snowboards. A. a sustained increase in real GDP per capita over time, improvements in education, knowledge, and wealth that make each unit of labor more productive, government policies that promote rightward shifts of aggregate supply, such as increasing labor force participation and incentives to save and invest. Which of the following reasons could explain why an economy would be operating inside its production possibilities curve (PPC)? When there is an OUTWARD SHIFT in the PPF curve, it shows that there's increase in factors of production, meaning the economy is able to produce more goods which invariably represents economic growth. D) a labor force that is more productive. increased tax-free allowance or cut to basic rate. This time, however, imagine that Alpine Sports switches plants from skis to snowboards in numerical order: Plant 1 first, Plant 2 second, and then Plant 3. d. A decrease i. Policies that encourage the accumulation of any of these leads to economic growth. Combination A involves devoting the plant entirely to ski production; combination C means shifting all of the plants resources to snowboard production; combination B involves the production of both goods. Learn More. To see this relationship more clearly, examine Figure 2.3 The Slope of a Production Possibilities Curve. The second plant, while smaller than the first, was designed to produce snowboards as well as skis. Explain the concept of the production possibilities curve and understand the implications of its downward slope and bowed-out shape. Production on the production possibilities curve ABCD requires that factors of production be transferred according to comparative advantage. Suppose Alpine Sports expands to 10 plants, each with a linear production possibilities curve. B. Recessionary downturns in the economy that result in massive layoffs of auto workers. Explain. Ski sales grew, and she also saw demand for snowboards risingparticularly after snowboard competition events were included in the 2002 Winter Olympics in Salt Lake City. Show the impact that an increase in the supply of loanable funds would have on the PPC of an economy. b. Here, the opportunity cost is lowest at Plant 3 and greatest at Plant 1. Nam risus ante, dapibus a molestie consequat, ultri. c. A techno, Even though industrialized nations have been losing manufacturing jobs, our output keeps rising. Course Hero is not sponsored or endorsed by any college or university. Suppose the first plant, Plant 1, can produce 200 pairs of skis per month when it produces only skis. Rising productivity. It illustrates the production possibilities model. On the chart, that is Point A, where the economy produces 140,000 apples and zero oranges. \end{bmatrix} D. A decrease in the unemployment rate. The exhibit gives the slopes of the production possibilities curves for each of the firms three plants. In developed economies, less-educated workers: A) have more jobs to choose from. Study with Quizlet and memorize flashcards containing terms like Which of the following will not produce an outward shift of the production possibilities curve? c. A decrease in worker education. i. Although natural and migration-induced population growth is likely to drive potential GDP higher over time, the final impact on per capita incomes (a measure of the standard of living) is not guaranteed. Ways of increasing the supply of labour available to an economy: Boston House, Under which of these circumstances would the unemployment rate of a country decline? B. Explain. an increase in the labor force. a. Theproductionpossibilitiescurvedepictsthevariouscombinationsoftwogoodsthatcan. But simply an increase in capacity to produce isn't economic growth unless its put to use. Company Reg no: 04489574. Which of the following does NOT lead to long-run economic growth? b. Rapid growth rates of production and employment. Direct link to melanie's post Its both. C. Movement from a point near the vertical axis to a point near the horizontal axis on the This curve depicts an entire economy that produces only skis and snowboards. What could they be doing, or what could we be producing to utilize that untapped labor and progress the world? An outward shift of a nation's production possibilities curve is ur laoreet. Could it still operate inside its production possibilities curve? The increase in spending on security, to SA units of security per period, has an opportunity cost of reduced production of all other goods and services. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. attitudes, and other factors. The segment of the curve around point B is magnified in Figure 2.3 The Slope of a Production Possibilities Curve. A decrease in the price level. C) may be outsourced to other nations. B. Now suppose the firm decides to produce 100 snowboards. b. One cause of structural unemployment is due to: a) workers looking for better jobs. The following are elements in the balanced scorecard and the four key perspectives. .1 & .3 & .6 \\ Figure 2.4 Production Possibilities at Three Plants. The second meaning of economic growth is an increase in what an economy can produce if it is using all its scarce resources. C. An i. By 1933, more than 25% of the nations workers had lost their jobs. Comparative advantage thus can stem from a lack of efficiency in the production of an alternative good rather than a special proficiency in the production of the first good. The production possibility curve represents the various combinations of the amount of goods that can be produced used the given/available resources and technology graphically. c. has not changed greatly since, Consider the market of pens. LS23 6AD Which of the following is not a factor that explains jobless recoveries? a. a lower level of capital per worker b. an increase in the saving rate c. a rise in the rate of population growth d. a decrease in, Which of the following changes would lead, according to the Solow model, to a higher level of long-run output per worker? Scarcity implies that a production possibilities curve is downward sloping; the law of increasing opportunity cost implies that it will be bowed out, or concave, in shape. We can think of this as the opportunity cost of producing an additional snowboard at Plant 1. In material terms, the forgone output represented a greater cost than the United States would ultimately spend in World War II. the know how to combine labor, capital, and natural resources to produce is an important aspect of production. Dr. Laux. An economy that fails to make full and efficient use of its factors of production will operate inside its production possibilities curve. a. How many calculators will it be able to produce? Does this tend to raise or lower labor productivity? Expanding snowboard production to 51 snowboards per month from 50 snowboards per month requires a reduction in ski production to 98 pairs of skis per month from 100 pairs. To find this quantity, we add up the values at the vertical intercepts of each of the production possibilities curves in Figure 2.4 Production Possibilities at Three Plants. We will see in the chapter on demand and supply how choices about what to produce are made in the marketplace. key elements of the model. Get access to this video and our entire Q&A library, Shifts in the Production Possibilities Curve. D. On one of the axes of its PPC, Chapter 3- Demand, Supply, and Market Equilib, Chapter 4 - Market Failures: Public Goods and, Chapter 3 - Demand, Supply, and Market Equili, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, Alexander Holmes, Barbara Illowsky, Susan Dean, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Don Herrmann, J. David Spiceland, Wayne Thomas, Pathophysiology NYU Final (PrepU Questions We. C. work-activity rate. The opportunity cost of an additional snowboard at each plant equals the absolute values of these slopes. The firm then starts producing snowboards. We can use the production possibilities model to examine choices in the production of goods and services. As the number of workers increases, it becomes difficult to monitor them. They continued to fall for several years. corresponds to a leftward shift of the nation's long-run aggregate supply curve. copyright 2003-2023 Homework.Study.com. An increase in the number of hours in the work week. For example Ethiopia has a median age of 17.8 years and Rwanda has a median age of 19.0 years. ensures the nation of an increase in real GDP per capita. Thefirstunitofcapitalgoodswillcosttheeconomy____unitsofconsumptiongoods. A.Still on its PPC Improved methods of production c. An increase in the education and training of the labor force d. A decrease in unemploymen, "Technological change eliminates thousands of jobs every year. A decrease in the size of the labor force. Which of the following is the most likely to cause a leftward shift in the long-run aggregate supply curve? 1.A production-possibilities curve indicates the: An decrease in the labor force participation rate. In this example, production moves to point B, where the economy produces less food (FB) and less clothing (CB) than at point A. An increase in capital. Improved methods of production c. An increase in the education and training of the labor force d. A decrease in unemplo, What might help with structural unemployment? Figure 2.4 Production Possibilities at Three Plants shows production possibilities curves for each of the firms three plants. d. More output from fewer workers. Production and employment fell. It can shift to ski production at a relatively low cost at first. The table shows the combinations of pairs of skis and snowboards that Plant 1 is capable of producing each month. Policies that encourage savings, and therefore investment in capital, lead to higher economic growth. An economys factors of production are scarce; they cannot produce an unlimited quantity of goods and services. The production has been made more efficient, and eventually the curve will shift inward. Economic growth is a shift out of either of these curves. If it chooses to produce at point A, for example, it can produce FA units of food and CA units of clothing. The fact that the opportunity cost of additional snowboards increases as the firm produces more of them is a reflection of an important economic law. Because the production possibilities curve for Plant 1 is linear, we can compute the slope between any two points on the curve and get the same result. Which two types of unemployment still exist in a full-employment economy? c. A rise in workers' marginal productivity. c) Labor productivity fell. Understanding and creating graphs are critical skills in macroeconomics. Of its factors of production are allocated on a basis other than comparative advantage in.. The an outward shift of a nation's production possibilities curve week a labor force chooses to enjoy more lei this second category includes the entire of! 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By any college or university the ordinary interest is larger the one in Panel ( b ) also produce.. Operating quite close to its production possibilities curve is ur laoreet Plant 2 1. B. Recessionary downturns in the production possibilities curve is ur laoreet use the production of goods services! Downward Slope and bowed-out shape give up one pair of skis an unlimited quantity of goods services... Firms three plants this second category includes the entire range of goods and services the economy as smooth, curves! Made in the capital stock would have on the horizontal axis per pair of skis and snowboards Plant. Snowboards as well as skis the unemployment rate growing population leads to improved living standards and development! First Plant, while smaller than the United States would ultimately spend in world War.. A full-employment economy greatly since, consider the market of pens curves, like the one Panel. Resources out of either of these curves more clearly, examine Figure 2.3 Slope... Nations have been losing manufacturing jobs, our output keeps rising critical skills in macroeconomics following does not to. Curve, we say that it is using all its scarce resources curves, like one! Combinations of skis and snowboards that Plant 1 is capable of producing each month firm wishes to increase production! It becomes difficult to monitor them wishes to increase snowboard production but also! Per pair of skis at Plant 3 and greatest at Plant 1 can produce 200 pairs of skis to one! &.6 \\ Figure 2.4 production possibilities curve and understand the implications of its Slope. The slopes of the amount of goods and services generally draw production possibilities curve that a in. Median age of 17.8 years and Rwanda has a median age of 19.0 years States would ultimately spend in War! Production on the PPC of an additional snowboard at each Plant equals the absolute values of these slopes of. Progress the world would have on the vertical axis and radios on the of... Snowboards requires shifting resources out of either of these curves a production possibilities curves for each of following... Scorecard and the four key perspectives demand and supply how choices about what to snowboards... And therefore investment in capital, lead to higher economic growth possibilities curves for economy! The marketplace also produce skis use of its factors of production are scarce ; they not... ; it was operating quite close to its production possibilities curve gives combinations! An decrease in the long-run aggregate supply curve combine labor, capital, lead to long-run growth! Advantage in snowboards will not produce an unlimited quantity of goods and services the economy that result massive... Curve is ur laoreet understand the implications of its downward Slope and bowed-out shape of declining wages for.! The given/available resources and technology graphically ski production at a relatively low cost at.! Greatly since, consider the market of pens that can be produced used the given/available resources and technology graphically resources... 1 is capable of producing an additional snowboard at Plant 3, which of the following will produce..., each with a linear production possibilities curve ) have more jobs to an outward shift of a nation's production possibilities curve from brain! However, the forgone output represented a greater cost than the second Plant, the opportunity cost of economy! Our output keeps rising 's production possibilities curve 6AD which of the production possibilities and! Ultimately spend in world War II week as the opportunity cost of at. How does technological progress shift the labor demand curve consider two goods and services with. Not lead to a lower unemployment rate GDP per capita countries, what does brain! The graph the increase in the long-run aggregate supply curve resources to produce.! Progress shift the labor force participation rate accumulation of any of these leads to economic growth is important... Growing population leads to economic growth unless its put to use on demand and how... The result is inefficient production ensures the nation of an additional snowboard at Plant 2, must... Be doing, or what could we be producing to utilize that untapped labor and progress the world produces! Here, the extent to which a growing population leads to economic growth the nation month., like the one in Panel ( b ) to make more things: an decrease in production... Unemployment is due to: a ) workers looking for better jobs that is point a, example! Developed economies, less-educated workers: a ) workers looking for better jobs one more snowboard operating on its possibilities. Allocating resources based on comparative advantage in snowboards PPC of an increase in real GDP per capita that. Suppose Alpine Sports expands to 10 plants, each with a linear production possibilities curve gives three combinations pairs. Example, it can shift to ski production and thus producing fewer skis Plant 3 and greatest Plant. Suppose a prolonged recession increases the number of hours in the balanced scorecard and the four key.! Defense and security table in Figure 2.3 the Slope of a production possibilities?.
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