Chapter 1
11. Explain how (if at all) each of the following events affects the location of a country’s production possibilities curve:
The quality of education increases.
This event would result in production growth which would shift the curve outward and to the right. b. The number of unemployed workers increases.
This event would cause economy to produce less and shift the curve inside c. A new technique improves the efficiency of extracting copper from ore.
This event would increase productivity and shift curve outward to the right d. A devastating earthquake destroys numerous production facilities.
This event would not produce any growth and the curve will shift inward.
12. Suppose that, on the basis of a nation’s production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires but that it can get the robot from another country in exchange for 9000 pizzas. Relate this information to the following statement: “Through international specialization and trade, a nation can reduce its opportunity cost of obtaining goods and thus ‘move outside its production possibilities curve.’”
Without international specialization and trade to produce one additional unit of robot, the economy must forgo 10000 pizzas, which will reduce the opportunity cost of an industrial robot.
However, with the international trade, it is able to get one industrial robot, in exchange for 9000 pizzas. This too would result in a reduction of opportunity cost but the economy can move outside its production possibilities curve.
Appendix Question 1
Briefly explain the use of graphs as a way to represent economic relationships. What is an inverse relationship? How does it graph? What is a direct relationship? How does it graph?

Graphs are used to help you visualize and understand economic