Question

1. A. In the empty graph provided below, NEATLY draw a picture of a production possibilities frontier curve and label it PPC1. Identify each axis as measuring either apples or ovens (label each axis).

B. Select and label Point A, which the economy only focuses and produces Apples; Point B, which represents the economy only focuses and produces ovens.

C. Now assume this economy develops new technology which enables it to produce more of only (one good) ovens. Now neatly draw this new production possibilities frontier that displays the ability to produce more of both goods and label this new curve PPC2.

Answer 1

a) The above graph shows the PPf of oven and apples on the vertical axis we have apples and on the horizontal axis we have ovens.

b) Point A and point B represents the maximum output of Apple and ovens respectively.

c) PPf 2 represents the area when the output has increases of oven due to improved technology.