Question

1.14 Explain how each of the following situations would affect a nation's production possibilities curve. a. A law is passed which makes community college tuition-free for all U.S. citizens. b. An unexpectedly mild spring results in a bumper crop of citrus fruit in both Florida and California.

Answer 1

1. The PPC shifts up and to the right
2. The PPC shifts up and to the right

When economic output increases or decreases due to any factor will shift in the PPC curve. As the economy grows (Ceteris paribus), there will be more production, eventually the production possibilities curve will shift outward or it will shift to the right. In other words, outward shifting of the curve, or the rightward shift means output is increasing. Since in both conditions the output will increase and thus the PPC will shift up and to the right.