Why the PPF might be straight or bowed. Suppose there are two goods, computers and automobiles....

 

Transcribed Image Text:

Why the PPF might be straight or "bowed." Suppose there are two goods, computers and automobiles. The production function for each good is. Suppose total capital and labor in the economy are K-L=100. The number of cars vs computers is determined by how much of the L is used to produce each good. In each case below, compute how many cars and computers are built. K in each industry is fixed: K = 64 for cars and K = 36 for computers. Note that total L always adds to 100. Why the PPF might be straight or "bowed." Suppose there are two goods, computers and automobiles. The production function for each good is. Suppose total capital and labor in the economy are K-L=100. The number of cars vs computers is determined by how much of the L is used to produce each good. In each case below, compute how many cars and computers are built. K in each industry is fixed: K = 64 for cars and K = 36 for computers. Note that total L always adds to 100.

Answer rating: 100% (QA)

Answer The Production Possibility Frontier PPF can be either straight or bowed depending on the natu... View the full answer