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Explain how (if at all) each of the following situations affect the location of a country’s production possibilities curve.

a. The quality of education improves.
b. The number of unemployed workers rises.
c. A new technique improves the efficiency of extracting lithium from ore.
d. A devastating war destroys numerous factories

Respuesta :

Answer:

a. Production movement towards PPC , b. Production movement away from PPC, c. PPC shifts rightwards / outwards, d. PPC shifts leftwards / inwards.

Explanation:

PPC is the graphical representation of product combinations that an economy can produce, given resources & technology.

Points on PPC reflect the best efficient utilisation of available resources & technology. Any point under PPC reflects inefficient utilisation of resources. Points beyond PPC are unattainable, unless growth in either resources/ technology shifts the PPC curve outwards.

a. Education quality improvement: leads to better utilisation of available human resource & hence moves production towards PPC.

b. No. of unemployed workers rise : leads to inefficient utilisation of available human resource & hence moves production away from PPC.

  • PPC location doesn't change in either of the above cases. It changes in the below cases:

c. New Technical Improvement: increases the production potential of country & shift the PPC curve outwards/ rightwards.

d. Devastating war : destroying resources (factories) reduces the production potential & shift the PPC curve leftwards/inwards.

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