Question

Ruritania produces Widgets and Gizmos. If all of its factors of production are committed to making widgets exclusively, it can make 8 million units each year. If all of its factors are committed to making Gizmos exclusively, it can make 8 million units per year.

Ruritania's Ministry of Growth has considered various plans to stimulate economic growth in the kingdom. Adjust the production possibilities frontier (PPF) on the graph to show the impact of a successful plan to provide more on-the-job training.

Answer 1

Answer:

*see image*

Explanation:

The production possibilities frontier is a line showing the maximum combinations of two goods that a nation can produce. One variable that impacts the PPF is the productivity of a nation's workers.

A successful increase in the Literacy rate will shift the PPF to the right i.e. outward and the nation can produce more and more of the two goods, it will increase the labor capacity and with it the economic capacity will also increase .

Ruritania's plan to provide more on-the-job training increases the human capital in the labor force and increases productivity. As workers can now produce more widgets and gizmos, the PPF should shift outward.