the graph below shows the short - run production possibilities frontier for a hypothetical country whose…

the graph below shows the short - run production possibilities frontier for a hypothetical country whose currency is the u.s. dollar. the country chooses to produce the mix of capital and consumer goods indicated by point a. this leads to a long - run expansion of the production possibilities frontier, with a 20% increase in production capacity for both consumer and capital goods. use the curved - line tool to draw the new production possibilities frontier. point a happens to coincide with the middle control point of the short - term curve: use that to help you decide where the curved - line tools middle control point of the long - term curve should go (do not use the point tool to plot a point). to refer to the graphing tutorial for this question type, please click here.

the graph below shows the short - run production possibilities frontier for a hypothetical country whose currency is the u.s. dollar. the country chooses to produce the mix of capital and consumer goods indicated by point a. this leads to a long - run expansion of the production possibilities frontier, with a 20% increase in production capacity for both consumer and capital goods. use the curved - line tool to draw the new production possibilities frontier. point a happens to coincide with the middle control point of the short - term curve: use that to help you decide where the curved - line tools middle control point of the long - term curve should go (do not use the point tool to plot a point). to refer to the graphing tutorial for this question type, please click here.

Answer

Explanation:

Step1: Understand production - possibilities frontier concept

The production - possibilities frontier (PPF) shows the combinations of two goods that an economy can produce given its resources and technology. An increase in production capacity shifts the PPF outward.

Step2: Calculate new points

Since there is a 20% increase in production capacity for both consumer and capital goods, if the original coordinates of point A are (x, y) for consumer and capital goods respectively, the new coordinates will be (1.2x, 1.2y).

Step3: Draw the new PPF

Use the curved - line tool to draw a new curve that is an outward shift of the original PPF, with the middle control point corresponding to the new position of point A (after the 20% increase).

Answer:

Draw a new outward - shifted production possibilities frontier curve using the curved - line tool with the new position of point A (20% increase in both axes values compared to the original point A) as the middle control point.