Problem
Draw and label a production possibilities curve for a society that produces two broad categories of goods: Food and tools.
i. The PPC you drew above is either a straight line or bowed outward. Explain why you shaped the PPC the way you did.
ii. What does the PPC represent for this society?
iii. Use the PPC (above) to illustrate what would happen in this society if there were suddenly lots of unemployed workers in the country. Suppose the society above decides to start devoting slightly more resources to tools rather than food.
iv. What is the short run cost of producing more tools this year?
v. What is the probable long term outcome for this society? Explain. Illustrate on the PPC above.