Production Possibilities Curve (of Frontier) Robots What basic economic concepts enn it be ted te Pizzas 200 tions about the PPC V uurces are fixed i nation must cho pen on Robots Pizzas Escaneado con CamScannerWork individually and answer questions 1-5. If you finish before the allocated time, you can think about your answer to question 6. Questions to consider about the PPC 1) Which point(s) are attainable and desirable? WHY? 2) Which point(s) are attainable but not desirable? WHY? 3) Which point(s) are unattainable? Is this point desirable? Explain 4) Which point will mean more consumption in the future? Explain. 5) Which point means more consumption now? Cxplain 6) Why is the PPC bowed outwards? 130195 Pizzas | oan aceasta anal Escaneado con CamScannerLaw of increasing opportunity cost: As the production of a particular good increases, the opportunity cost of producing an additional unit rises. Rationale: Economic resources are not completely adaptable to alternative uses. Many resources are better at producing one type of good than at producing others, Pizzas and Robots: Assume Italy was producing 200 pizzas and 0 robots. Surely, many of the resources (land, labor and capital) being used to make pizzas would be better Suited to making robots. As Italy starts making Its first two robots It has to give up very few pizzas, since only those resources that are suited for robot production will be used, At first, 2 robots “cost” italy only 5 pizzas. But as the country makes more and more robots, the opportunity cost Increases, because at some point pizza makers will have to build robots. AS Italy approaches 10 robots, the opportunity cost of the last two robots Js 130 pizzas, as resources better suited for plzza production are employed in robot factories. \ constant opportunity cost, A o Pizzas Italy's PPC increasing oppartunity cost 1 A Retets O-NusUuaNawsd Du aa a a HU Ta IAD Buzas Shifting the PPC The PPC shifts outward when there is an improvement in the quantity/quality of the factors of production. Escaneado con CamScanner/ What does this mean in the real world? / j The PPF will shift outwards when: + There are improvements in productivity and efficiency perhaps because of the introduction of new technology or advances in the techniques of production or an incr quality of labour Better management of existing resources More factors of production are available and used perhaps due to an increase in the size of the workforce due to inward migration or a rise in the amount of capital inputs available for businesses due to a rise in business investment The discovery of new natural resour uch as shale gas Innovation and technological advance which makes exploration and extraction of known resources more commercially viable ase in the So why would the PPC shift inwards? | Escaneado con CamScanner