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Author Question: How does the production possibilities frontier illustrate production efficiency? What will be an ... (Read 58 times)

OSWALD

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on: Jun 29, 2018
How does the production possibilities frontier illustrate production efficiency?
 
  What will be an ideal response?

Question 2

If policymakers implement an expansionary fiscal policy but do not take into account the potential for crowding out, the new equilibrium level of GDP is likely to
 
  A) be at potential GDP.
  B) be below potential GDP.
  C) be above potential GDP.
  D) There is insufficient information given here to draw a conclusion.


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cassie_ragen

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The combinations of outputs that lie on the PPF illustrate the concept of production efficiency. These points are the maximum production points possible and are attained only by producing the goods and services at the lowest possible cost. Any point inside the frontier reflects production where one or both outputs may be increased without decreasing the other output level. Clearly, such points cannot be production efficient.

Answer to Question 2

B


OSWALD

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

cdmart10

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Reply 3 on: Yesterday
:D TYSM

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