Understanding the use of the PPF in Economics

a) Draw the production possibility frontier for coconuts and turtle eggs in this small economy.

b) Suppose that a new climbing device was invented making the harvesting of coconuts easier. Each worker can now gather 28 coconuts per day. Draw

the new PPF.

Question 1

A tribe on a remote tropical island includes five workers whose time is devoted either to gathering coconuts or to collecting turtle eggs. Regardless of how many workers are engaged in the same occupation, a worker may gather either 20 coconuts or 10 turtle eggs in a day.

Efficient use of resources

Inefficient use of resources

Unattainable - at current level of technology or resources

Question 2

The diagram shows the PPF for a economy choosing between producing watches and cameras. Draw the diagram and for each point shown [a to e] state whether it is;

A

B

Question 3

The two diagrams show PPF diagrams for 2 different economies. They both illustrate the trade off between different choices.

Explain what the difference is between the two. Ensure that you include a numerical illustration of your answer.

Question 4

The diagram illustrates the choice between producing goods to be consumed now or investment goods which would have an effect on the future productive capacity of the economy.

a) For this economy, what can we say about the position of the frontier in subsequent periods? Draw a diagram to illustrate.

b) How is your answer to (a) affected by the particular choice point selected in a given period?

c) Why do developing countries have a difficult choice, explain their dilemma? Use a diagram to support your answer.

Images from IRAQ

Question 5

Iraq beyond the war, a future?

How has Iraq suffered economically? There are many factors to consider which include; lost lives, destroyed roads, burning oil well, loss in confidence, increased spending on military goods etc. but we need to try and see how this has affected the people and the country as a whole.

a) What have the many years of war in Iraq done for Iraq’s Infrastructure and PPF (consider Iraq’s factor endowment)?

b) The Iraqi government decided to spend a large percentage of its national income on weapons. Why did this result in a lower standard of living for the Iraq’s civilians and the productive capacity of the country? Use diagrams to evaluate your answer.

An Iraqi tank is left abandoned amongst burning oil fields set alight be retreating Iraqi forces, how will

this damage the economy?

An Iraqi tank is left abandoned amongst burning oil fields set alight be retreating Iraqi forces, how will

this damage the economy?