Your economic consulting firm was recently hired by the President to advise on a
ID: 1147025 • Letter: Y
Question
Your economic consulting firm was recently hired by the President to advise on an upcoming environmental policy. The President is going to make a decision on the policy but wants to fully understand all of the economic issues involved Background: guided discussion Your briefing to the President will involve the trade-offs of implementing the environmental policy. First, a review of the core issues. Imagine a hypothetical country that produces two goods: broccoli and casinos. (a) Why is it most likely that the production possibilities frontier has a bowed-out shape?Explanation / Answer
(a)Due to the law of increasing opportunity cost, the production possibility frontier bowed out shape. Like, in the given question, if the opportunity cost of producing broccoli is more than the casinos, then the production possibility frontier will be bowed outward.
(C) A political party which wanted fewer casinos(Richsters) will reap the greater rewards as, due to increase in the education of laws of probability, casinos will not be able to reap more profits. As economic policies can alter the production possibilities, more broccoli will be produced, and fewer casinos, and also the opportunity cost of producing casinos will be more. So, therefore Richsters will reap gains.
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