Answer to Question #314357 in Microeconomics for Sun

Question

Draw and explain a production possibilities frontier for an economy that produces milk and flowers. What happens to this frontier if a disease kills half of the economy’s cow?

Answer 1

The economy produces two products( milk and flowers). The production possibility curve shows two products combined that the economy produces with given resources. If cows die, productive resources for milk decrease. This decreases the output of milk. Hence the shift in the production possibility curve inward, due to less milk production.

For the flowers, the change would not happen. The production of flowers remains unchanged because cows would not be having any effect on the production of flowers. Thus, no shift in the production possibility curve from the axis of flowers.