Question

A community in Northern Namibia produces only two goods, TVs and CDs. With the aid of properly labelled production possibilities curves illustrate each of the following (putting TVs on the vertical axis). 2.1.1 A shift in production from CDs (services) towards TVs (goods). (5) 2.1.2 An increase in the potential output of the community due to a greater availability of the factors of production.

Answer 1

Production possibilities curves – CDs and TVs

2.1.1 The PPF in orange shows the shift in production from CDs towards TVs. The PPF in black is the original PPF.

2.1.2 The PPF in purple shows an outward parallel shift because of an increase in potential output of the community due to a greater availability of the factors of production.

*****