The accompanying graph contains the production possibilities frontier (PPF) for

Question

The accompanying graph contains the production possibilities frontier (PPF) for Rubberland. Rubberland only makes two products, rubber band balls and rubber hoses, and on a given day can produce according to the PPF in the graph. Point A on the PPF represents the combination of the two goods Rubberland currently produces. Rubberland's Production Possibilities 180 160 140 120 When a new method of rubber processing is discovered, the productivity of all Rubberland's inputs increases. Please shift the PPF to show this change. Assume that Rubberland does not make more rubber band balls than they originally made at point A but still maximize their productive capabilities. Move point A to their new production point. How many more rubber hoses do they now produce per day than before? PPF 0 10 20 3040 50 60 70 80 90 100 Quantity of rubber hoses more hoses per day

Explanation / Answer

In the first case PPC WILL SHIFT OUTWARD to the right. due to technological progress.

In the second case production of rubberballs will remain same and production of rubber hoses will increase. Point A will move to 120 .PPC will start from pt A and move to 80 in the x axis.

Per day rubber hoses production will increase by 10 units.

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