Question

4. Shifts in production possibilities Suppose Ireland produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for alfalfa, an agricultural good, and construction vehicles, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of a technological advance in medicine that allows workers to live longer and have extended careers. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. 540 450 PPF E 360 I 270 180 90 PPF 100 200 300 400 500 600 ALFALFA (Millions of bushels)

Answer 1

As per the question the Ireland produces two types of goods that is alfalfa, an agriculture good and construction of vehicle a capital good. Due to technical advance in medicine that allows workers to live longer and have extended career in the Ireland as a result the production possibility curve will take an upward shift. Because healthy workers with higher lifespan could contribute more in the production of both alfalfa, an agriculture good and construction of vehicle a capital good in the Ireland.

In the above diagram horizontal axis production of Alfalfa an agriculture product and vertical axis shows production of vehicle a capital goods in the Ireland. Initially the economy was operating at PPF1, due to technological progress in medicine, which increases the lifespan and productivity of the workers in the Ireland. So the production possibility curve will take an upward shift from PPF1 to PPF2.