Question

a. Draw and explain a production possibilities frontier for an economy that produces cheese and milk. What happens to this frontier if a disease kills half of the economy’s cows? (1 Mark) b. Use a production possibilities frontier to describe the idea of “efficiency.” (1 Mark)

Answer 1

Answer:

Yes, it is necessary that the service sector should contribute maximum to GDP of an economy. In some of the economies the prime share of GDP comprises of agricultural sector but in other economies, it consists of service sector. When the economy grows, this proportion changes.. What happens to this frontier if a disease kills half of the economy’s cows? (1 Mark) b. Use a production possibilities frontier to describe the idea of “efficiency.