Question

- 1) Bud graph and show the three differen woh that DOCTIVE presos a combination of wheat and techno t Does the shape of this produtos po Increasing costs r tes the clothes 31) Moving from one option to another starting with A Calculate the opportunity for each computer in term of bushels of grain Does the answer (3) confirm your awe in question 2 4) If we know that computers are Capital goods and Grain is a Consumer good, which combination of computers and grain, B, C. Der E, a. would result in higher growth in the future? b. would result in lower growth in the future? And graph your answers 5) Show in new graph what would happened to old PPC, if the nation discover new festiller that wil he increase the production of Grain. 6) Show in new graph what would happened to old PPC, if the nation discover new new technology tha will help increase the production of both computers and Grain

Answer 1

201 -15) Computers o a 10 Grapes

H= production inefficiency

M= impossible combination.

Note: it is grain not grapes, I read it wrong

Yes, the shape of this production possibility prontier illustrates the principle of law of increasing costs. It is concane in slohe at every shape which point means increasing Law of increasing costs states that increases the oppurtunity cost an additional unit mises. as productions producing of - ③ from A to B, oppurtunily cast 1 0.2 B to c les CS Scanned with CamScanner.

- fexo from C to De Hurtunity cost z a - fum Dto from £ to Fa " Ofurtumly Cost = Loss of rain bain of computers I units of Grain that was to ne given up to produce an additional unit of computers VV LL hence now osum The can see oppurtunity cost is ricing, if increasing costs holds . 4. (a) computer - capital good Grain - consumer good Capital good will help in production - a combination of E(14,5) - ie 14 - computers & grain will help higher future growth (6) Kouer growth point B (5 14) 5 - computers & 14 - grain 0. 22 - PPC wille suo tilt outwards on the grain side a more grown can. lu produced now CS Scanned withoumain CamScanner

computers PPC will shift outwards on both the anis as with letter technology, more of both the goods can we produced. I brain Ics Scanned with CamScanner

Let me know if anything is unclear :)