Microeconomics help!!

Ive been given these questions referring to a booklet about ppf could any give me help or clues on what to write? thank you!1) What is a production possibility frontier for an economy?
2) Explain why a production possibility frontier might shift inwards or outwards
3) A peace group has put forward a proposal that the UK should halve its spending on defence including giving up its nuclear capability. Using production possibility frntiers, evaluate the possible economic implications of this proposal

Reply 1

fedorahat88

1) What is a production possibility frontier foran economy?

A PPF graphically depicts an economy’s capability to produce the maximum combination of two goods with a limited set of resources over a period of time.

2) Explain why a production possibility frontier might shift inwards or outwards
Reasons why the PPF may shift INWARDS
Natural disasters
Earthquakes (like Nepal 2015) have wrecked the main tourist attractions such as the Shree Pashupatinath Temple, which attracted tourism in Nepal’s capital, Kathmandu.Thus, Nepal’s capacity to provide tourism services like (taxis ride to thetemple, guide tours around the temple, donations gained by the temple).

–Loss of both capital (hammered taxis) and capital investment (money used tomaintain temples and tourist attractions).

Moreover,the deaths of 5000 people are a loss in human capital.

–Loss of potential labour

Most notably tropical cyclones in Bangladesh cause the inward shift of the PPF.Bangladesh is a low-lying country with a rich delta that harvests a lot of rice. However, being situated near the equator, they are hit with tropical storms every year. Moreover, Bangladesh’s current infrastructure is improving, but it does little to save lives and rice farmland.During storm surges and flooding, paddy fields become saline (thus, useless, as you can no longer harvest from soil that has come in contact with saltwater).

-Loss of land (rice and the fields where rice was growing)

When flooding rummages poorly built government offices and housing, infrastructure is damaged.

-Loss of capital (torn down houses, broken bridges)

War

One third of the French male population was killed in the First World War

-Loss of potential labour

Reasons why the PPF may shift OUTWARDS

State of technology improves whilst manufacturing
A machine that could assemble 70 iPhones in an hour is replaced by a machine that can produce 544 iPhones in the same time

Improved productivity
New techniques to perform the same job may be used in less amount of time by labour.

Discovery of new raw material (oil reserves usually make a great impact on the outward-shift when it comes to outward shift)
Imagine Saudi Arabia discovers 3 trillion galloons of more oil in it’s reserves. Their potential to produce would rise.

Natural Increase in population/Positive inflow of migrants
Basically, more workers, more capability to produce more.

(edited 8 years ago)

Reply 2

fedorahat88

Original post by EmmaWoodley

Could you elaborate a bit more on the final question? Like does the PPF consist only of nuclear capabilty VS defence spending or it spending on defence VS spending on consumer goods?