Question

Describe how each of the following would affect the U.S. production possibilities frontier: (a) an increase in the number of illegal immigrants entering the country, (b) a war that takes place on U.S. soil, (c) the discovery of a new oil field, (d) a decrease in the unemployment rate, and (e) a law that requires individuals to enter lines of work for which they are not suited.

Answer 1

Answer:

A. The production possibilities frontier would shift outward. As a result of the increase  in the number of illegal immigrants entering the country, there would be more labour available. As a result, production would increase shifting the PPC outward.

B. The production possibilities frontier would shift inward. A war would lead to the diversion of resources to the war. Also, production facilities might be destroyed as a result of the war. This would lead to an inward shift of the PPC

C. The production possibilities frontier would shift outward. The discovery would increase the resources that can be used in production. This would lead to an outward shift of the PPC

D. The production possibilities frontier would not change.  This is because  production was below the PPC as a result of unemployment. The decrease in unemployment will increase production back to a level on the PPC

E. production would take place at a point inside the production possibility frontier. This law would lead to an under-utilization of resources. This would lead to production taking place at a point inside the PPC

Explanation:

The Production possibilities frontiers is a curve that shows the various combination of two goods a company can produce when all its resources are fully utilised