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The production possibilities frontiers depicted in the diagram to the right illustrate A. the likely result of a ground war. B. technological advances in the tank industry. C. both the labor force and capital stock increasing. D. both the labor force and capital stock decreasing.

Ask by Evans Thornton. in the United States
Feb 03,2025

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Both the labor force and capital stock are increasing.

Solución

The production possibilities frontier (PPF) diagram illustrates the maximum output that can be produced with the available resources. A. The likely result of a ground war would be a decrease in the labor force and capital stock, leading to a shift inward of the PPF. Therefore, option A is incorrect. B. Technological advances in the tank industry would lead to an increase in the capital stock, but the labor force would remain the same. This would result in a shift outward of the PPF. Therefore, option B is incorrect. C. If both the labor force and capital stock are increasing, it would lead to an outward shift of the PPF, indicating an increase in the production possibilities. Therefore, option C is correct. D. If both the labor force and capital stock are decreasing, it would lead to an inward shift of the PPF, indicating a decrease in the production possibilities. Therefore, option D is incorrect. Therefore, the correct answer is C. both the labor force and capital stock increasing.

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Beyond the Answer

The production possibilities frontier (PPF) is a great way to visualize the trade-offs between two goods or services, helping us understand how resources are allocated in an economy. If one of the goods depicted represents military assets like tanks, shifts in the PPF can illustrate how a country may choose to prioritize defense spending, reflecting the potential consequences of a ground war. In real-world applications, PPFs can guide government policy decisions by showing the impact of various economic choices. For instance, if a nation decides to increase its military spending at the expense of consumer goods, the PPF shifts inward for the latter, highlighting the trade-off and opportunity costs involved in such decisions. This framework is vital for understanding the delicate balance of economic resources in times of conflict.

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