Question

a) Draw a diagram, which shows the production possibility curve for a country, which produces capital...

a) Draw a diagram, which shows the production possibility curve for a country,
which produces capital and consumer goods.
b) On this diagram show:
i. A point at which the economy is operating productively efficient,
ii. A point which is unobtainable for the economy given its resources and level of technology,
iii. A point at which the economy is operating inefficiently.
c) Briefly explain what happens to the PPF if there is an earthquake in the
country.
d) Briefly explain what happens to the PPF if the economy grows?
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