Explain why the following statement is True, False, or Uncertain? Suppose an economy produces...
Question:
Explain why the following statement is True, False, or Uncertain? Suppose an economy produces only cupcakes and croissants, according to a convex-to-origin production possibilities curve. If there is a technological improvement that affects only cupcake production, the economy could produce more of both goods.
Production Possibility Curve:
A curve that represents how much products and services an economy is able to manufacture if they use their entire set of resources and technology is called the production possibility curve. It is abbreviated as PPF or PPC.
Answer and Explanation: 1
This statement is False.
Explanation: The improvement in the technology of cupcake production will cause the PPC to rotate outward. Therefore, only the production of cupcakes will rise while that of croissants will remain the same.
Learn more about this topic:
Get access to this video and our entire Q&A library
Production Possibilities Curve: Definition & Examples
from
Chapter 11 / Lesson 28Understand what the production possibilities curve is, and learn how to construct and interpret a production possibilities curve along with the example.
Explore our homework questions and answers library
Browse
by subject