Answer to Question #121116 in Microeconomics for Ama-e Naruses

Question

Using a production possibilities curve, illustrate and explain the following circumstances for ;
1.3.1 A shift in production from a towards b?
1.3.2. An increase in the minimum wage rate?
1.3.3. Advancement in the capital used for b production?

Answer 1

Using a production possibilities curve, illustrate and explain the following circumstances for ; 

1.3.1 A shift in production from a towards b? 

1.3.2. An increase in the minimum wage rate? 

1.3.3. Advancement in the capital used for b production?

Question

1.3.1

The shifting of production from a toward b is due to an increase in inputs such as capital, improvement in technology and labour, which is evidence for economic growth in the surrounding environment.

Question

1.3.2

When there is an increase in minimum wages in the economy, it means the consumer is spending high in the marketplace, boosting the overall economic growth. It will cause the curve to shift outward because of an increase in active labour in the production sector.

Question

1.3.3

An increase in capital of production can cause a shift of production possibility curve outward because money is a piece of leading equipment used to produce good and service. When there is increase production capital, there will be maximum production of commodity and services. 

 Will cause the curve to shift outward because of the increase in active labour in the production sector.