Question

Question and Exercise 02-06

A country has the following production possibility table:

Resources Devoted to Clothing	Output of Clothing	Resources Devoted to Food	Output of Food
100%	20	0%	0
80	16	20	5
60	12	40	9
40	8	60	12
20	4	80	14
0	0	100	15

a. Draw the country’s production possibility curve.


b. What’s happening to the trade-off between food and clothing?

	The trade-off between food and clothing is increasing.
	There is no trade-off between food and clothing.
	The trade-off between food and clothing is decreasing.
	The trade-off between food and clothing stays the same.

c. Say the country gets better at the production of food. What will happen to the production possibility curve?

The production possibility curve:

	shifts out along the clothing axis only.
	shifts out along both axes.
	shifts out along the food axis only.
	shifts in along the food axis only.

d. Say the country gets equally better at producing both food and clothing. What will happen to the production possibility curve?

The production possibility curve:

	shifts out along both axes.
	shifts in along both axes.
	shifts out along the food axis only.
	shifts out along the clothing axis only.