Suppose that an economy, producing at point A on a production possibilities frontier, produces 450 units of good X and 200 units of good Y. Also suppose that, with the same resources and technology, the economy could produce at point B, which represents 650 units of good X and 500 units of good Y?

Business · High School · Thu Feb 04 2021

Answered on

In the scenario you've described, it is not possible for an economy to move from producing 450 units of good X and 200 units of good Y (point A) to producing 650 units of good X and 500 units of good Y (point B) without an improvement in technology or an increase in resources. A Production Possibilities Frontier (PPF) represents the maximum combination of goods or services that can be produced in an economy with the available resources and technology, assuming all resources are used efficiently.

Here's why the scenario is not possible with the same resources and technology: - If an economy is producing at point A on its PPF, it is already using all its available resources efficiently. - To reach point B and produce more of both goods, the economy would need to increase its resources (like labor, capital, raw materials) or improve its technology, which is assumed to be constant in your scenario. - If the economy could produce the amounts at B with the current resources and technology, then point A would not be on the PPF but rather inside the PPF, indicating inefficiency or underutilization of resources.

Therefore, in the context of a PPF, the move from point A to point B would likely involve some changes outside the given scenario, such as technological advancements, increased workforce, more capital, or better use of resources.

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