Question

For each of the following events, describe the likely effect on the country's production possibilities boundary (PPB). Start with a PPB like the one shown and draw the likely:

A) Expansion of the PPB
B) Contraction of the PPB
C) No change in the PPB
D) Transformation of the PPB

Answer 1

The production possibilities frontier (PPF) can expand, contract, remain the same, or transform depending on various factors such as efficiency, resources, technology, and fundamental changes in the economy.

Step-by-step explanation:

The production possibilities frontier (PPF) represents the maximum amount of goods and services an economy can produce given its resources and technology. Here are the likely effects on the PPF for each event:

1. Expansion of the PPF: If there is an improvement in efficiency or an increase in resources or technology, the PPF will expand outward. This means that the economy can produce more of all goods and services.
2. Contraction of the PPF: If there is a decrease in resources or technology, or if there is inefficiency in production, the PPF will contract inward. This means that the economy can produce less of all goods and services.
3. No change in the PPF: If there is no change in resources, technology, or efficiency, the PPF will remain the same.
4. Transformation of the PPF: If there is a fundamental change in the economy, such as a shift from an agrarian society to an industrial society, the PPF will transform. This means that the economy will be capable of producing different combinations of goods and services.