Question

Use the following information for questions 4-5:

i. increase in unemployment within the wheat sector

ii. increase in migration of unskilled laboreres in Country X

iii. increase in productivity associated with producing wheat

iv. increase in demand for wheat during a period of full employment

v. increase in capital stock within Country X

vi. improvement in technology associated with producing corn

4. Which of the event(s) listed above would not shift Country X's PPC?

A. events i and iv

B. events i and ii

C. events i, ii, and iv

D. event iv

E. none of the above

5. Which event(s) listed above would shift Country X's PPC along both axes?

A. event i

B. event i, ii and v

C. events i, iii and vi

D. events ii, iv, v and vi

E. events ii and v

6. The negative slope of the PPC directly illustrates which of the following:

A. any country has only a limited number of fixed factors to use and producing goods and services

B. that country faces opportunity cost when making production-related decisions

C. that a country has fixed rates of productivity associated with producing goods and services

D. The country is incapable of producing outside of their PPC

7. If a country's PPC gets increasingly steeper over time, then:

A. this shift could be explained by an increase in unemployment in the machinery or oil sector

B. this shift could be explained by an increase in demand within the machinery or oil sector

C. this shift could be explained by technological change within the machinery or oil sector

D. The shift could be explained by general increase in productivity within that country

E. both A and B are correct

Answer 1

Ans 4: event iv, that is , increase in the demand for wheat during a period of full employment would not shift the country X's PPC because it describes the possible combination go two goods that can be produced with the available technology and resources. Therefore, any change in the resources and technology would cause a shift in the PPC.

Ans 5: event ii and v ,that is ,increase in the migration of unskilled labourers in country X and increase in the capital stock within country X will shift the country X PPC along both axes, because these two events change the productive capacity(resource and technology) with respect to both the goods while other options cause the change in PPC along only one axes.

Ans6: The negative slope of PPC illustrates the opportunity cost faced by the country when making production-related decisions because we are having limited resources.

Ans 7: If a country's PPC gets increasingly steeper over time , this shift could be explained by the general increase in the productivity within that country.