After reading the chapters from the background materials page, please address the following questions in an essay form:

1. Define the production possibilities curve in your own words.
2. Could a nations production possibilities curve ever shift inward? What are TWO factors that may cause this to occur?
3. How can an economy achieve points that are outside the production possibilities curve?

Use the following graph to address questions 4 and 5 below. Consider a production possibilities curve (PPC) for an economy that produces farm goods and factory goods. It can produce the combinations listed in the table. Notice if the economy produces more farm goods, it will give up factory goods resources.

4. If the economy wanted to move from point b to c, what would be the opportunity cost of increasing farm production by 10 tons? Your answer should be in terms of factory goods.
5. Compare the movement from b to c and from e to f. What do you notice about opportunity cost? Explain.

Assignment Expectations

Use concepts from the modular background readings as well as any good-quality resources you can find. Be sure to cite all sources within the text and provide a reference list at the end of the paper.

Length: 45 pages double-spaced and typed.

The following items will be assessed in particular:

• Your ability to apply the basic concepts to the questions.
• Some in-text references to the modular background readings (APA formatting not required).
• The essay should address each element of the assignment. Remember to support your answers with solid references including the Case readings.