Question

Explain how each of the following items might or might not change the Production Possibilities Curve for the State of Georgia. Explain why or why not.

(1) The government of Georgia spends more on education

(2) Coca-Cola has a layoff of 2,000 workers, many of them work and live in Atlanta

(3) Tax incentives spur Mercedes to build a manufacturing plant in Georgia

(4) The Atlanta Braves move from Turner Field in Atlanta to Suntrust Park in Cobb County

Answer 1

1 - It will shift PPC to right

This is because more spending on education will lead to rise in productivity of workforce in future leading to rightward shift in PPC

2 - PPC will shift Inward

This is because , as the result of laying off of workers , the capacity to produce will decline leading to inward shift in PPC.

3 - PPC will shift rightward

This is because the rise in manufacturing plant will create additional incentive for production. This will lead to rightward shift in PPC.

4 - This will not shift the PPC

However it may lead to the movement along the PPC curve. This is because there is no sign or increment in the resources. Only the production is being shifted from one good to other. Hence this will cause movement along PPC curve.