Production Possibility Frontier Question???? (1 Viewer)

[zannasheayarrow]

Hey everyone, can someone help me with this question:

Which of the following would cause the production possibility frontier to shift outwards?

• a) An increase in migration into a country resulting in lower unemployment
• b) An increase in interest rates

There were more options but I have already ruled them out.

 

[Examine]

a) An increase in migration into a country resulting in lower unemployment

With less unemployment businesses are hiring more people, increasing the efficiency of the time to make a product. More efficiency=more products that can be made= frontier to shift outwards.

 

[zannasheayarrow]

a) An increase in migration into a country resulting in lower unemployment

With less unemployment businesses are hiring more people, increasing the efficiency of the time to make a product. More efficiency=more products that can be made= frontier to shift outwards.

Thanks! That is what I was thinking but I just wasn't sure how an increase in migration into the country would lower unemployment.

 

[OzKo]

a) An increase in migration into a country resulting in lower unemployment

With less unemployment businesses are hiring more people, increasing the efficiency of the time to make a product. More efficiency=more products that can be made= frontier to shift outwards.

I would argue that this is a bit of a convoluted explanation.

The PPF represents the different combinations of goods which can be produced if usage of an economy's resources are maximised. If migration occurs, this increases the potential labour stock, thus the economy can theoretically produce more goods if labour usage is maximised. As a result, more of good A and B can be produced, thus the PPF moves out.

 

[determine]

Agreed with the above.

 

[RivalryofTroll]

More resources, in this case - labour, would result in the curve/frontier shifting outwards (like the process of economics growth). More labour results in increased production of goods and services.

 

[RealiseNothing]

Agreed with the above.

pssh.... what would you know about economics.

On a serious note, this stuff makes me glad that I chose economics, such an awesome subject.

 

[Examine]

It's a gud subject

 

[determine]

pssh.... what would you know about economics.

On a serious note, this stuff makes me glad that I chose economics, such an awesome subject.

i hope you're joking.