Draw a production possibilities frontier (PPF) for oil and food, where food production (Qf) is in the vertical axis and oil production (Qo) is in the horizontal axis. Draw an initial production point on the PPF where the slope of the PPF equals minus the relative price of oil. Label this point 1. If the price of oil on world markets rises sharply due to political reasons, determine the change in production; label the new point on the PPF with a 2. How does this change in the price of oil affect the income distribution in the oil producing countries, assuming there are capital owners and workers involved in the production process?
Draw a production possibilities frontier (PPF) for oil and food, where food production (Qf) is in the vertical axis and oil production (Qo) is in the horizontal axis. Draw an initial production point on the PPF where the slope of the PPF equals minus the relative price of oil. Label this point 1. If the price of oil on world markets rises sharply due to political reasons, determine the change in production; label the new point on the PPF with a 2. How does this change in the price of oil affect the income distribution in the oil producing countries, assuming there are capital owners and workers involved in the production process?
Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth
Section: Chapter Questions
Problem 7SQ
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- Draw a production possibilities frontier (
PPF ) for oil and food, where food production (Qf) is in the vertical axis and oil production (Qo) is in the horizontal axis. Draw an initial production point on the PPF where the slope of the PPF equals minus the relative price of oil. Label this point 1.
- If the price of oil on world markets rises sharply due to political reasons, determine the change in production; label the new point on the PPF with a 2.
- How does this change in the price of oil affect the income distribution in the oil producing countries, assuming there are capital owners and workers involved in the production process?
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ISBN:
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Author:
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