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Business, 18.06.2020 06:57 misk980

Suppose we can divide all the goods produced by an economy into two types: consumption goods and capital goods. Capital goods, such as machinery, equipment, and computers, are goods used to produce other goods. Required:
a. Use a production possibilities frontier graph to illustrate the trade-off to an economy between producing consumption goods and producing capital goods. Is it likely that the production possibilities frontier in this situation would be a straight line oe concave? Briefly explain.
b. Suppose the technological advance occurs that affects the production of capital goods but not consumption goods. Show the effect on the production possibilities frontier.

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