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Chapter 2: Q. 2.23 (page 47)

Suppose that in Fig 2-4, the nation currently has sufficient resources to produce combinations located along only the innermost production possibilities curve. In addition, suppose that the nation's residents have determined that smartphones function mainly as consumption goods while tablet devices function primarily as capital goods. If the nation produces no additional tablets this year, will the intermediate-shifted PPC resulting from minimal economic growth or the farthest shifted PPC caused by more significant economic growth be more likely to apply next year?

Short Answer

Expert verified

No it won't.

Step by step solution

01

Step1. Given information

Given it is that the nation does not have enough resources and can only produce at the inner, inferior combinations of the PPC curve.

02

Step2. Explanation

The growth of any country is linked to the production of capital goods primarily. If a country is able to produce more, that is because the support of the production of capital goods exist. But, here since the question says there is no production of capital goods, there might not be any expansion of production. So, there is no shift in PPC/PPF.

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Most popular questions from this chapter

Country A and country B produce the same consumption goods and capital goods and currently have identical production possibilities curves. They also have the same resources at present, and they have access to the same technology.

a. At present, does either country have a comparative advantage in producing capital goods? Consumption goods?

b. Currently, country A has chosen to produce more consumption goods, compared with country B. Other things being equal, which country will experience the larger outward shift of its PPC during the next year?

Suppose that in Fig 2-24, the nation with other wise the same background conditions as in Problem 2-23 currently has sufficient resources to produce combinations located along only the innermost production possibilities curve. If the nation produces no additional smartphones this year, will the intermediate-shifted PPC resulting from minimal economic growth or the farthest shifted PPC caused by more significant economic growth be more likely to apply next year?

In response to Senator Creighton鈥檚 statement reported in Problem 2-10, Senator Long replies, 鈥淲e must remain at our current production combination if we want to be able to produce more consumption goods in the future.鈥� Of the labeled points on the diagram, which one could depict the future production combination Senator Long has in mind?

Could the U.S. Navy expand its production of both ships and weapons after switching from missiles to rail-gun weapons? Explain your reasoning.

Why do you suppose that economists have estimated the dollar value of the combined opportunity costs of time that U.S. commuters spend in gridlocked traffic to be in excess of $150billion per year? Explain your reasoning.
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