- An economy is operating on its production possibilities frontier for 2019. A year later it is operating at a point beyond 2019's production possibilities frontier, but within 2020's production possibilities frontier. From this information. It can be concluded that between 2019 and 2020. a) Both economic growth and an increase in unemployment occurred. b) Both economic growth and a reduction in unemployment occurred. c) Only a reduction in unemployment occurred. d) Only economic growth occurred.
Answers
Answer:
Explanation:
The Production Possibilities Frontier (PPF) is a graph that shows all the different combinations of output of two goods that can be produced using available resources and technology. The PPF captures the concepts of scarcity, choice, and tradeoffs.
The shape of the PPF depends on whether there are increasing, decreasing, or constant costs.
Points that lie on the PPF illustrate combinations of output that are productively efficient. We cannot determine which points are allocatively efficient without knowing preferences.
The slope of the PPF indicates the opportunity cost of producing one good versus the other good, and the opportunity cost can be compared to the opportunity costs of another producer to determine comparative advantage.
From this information, it can be concluded that between 2019 and 2020:
b) Both economic growth and a reduction in unemployment occurred.
- We conclude that both economic growth and a reduction in unemployment has occurred as it is operating in a booming phase where there has been a sudden increase in resources and business.
- Acc to the question, between 2019 and 2020 there has been a rapid increase in economical growth which is beyond the capacities of 2019, but seemingly possible for 2020.
- Thus, there must have been a reduction in unemployment, as more work means more money and ultimately more growth and development enhancing the GDP.