Consider a country that has two industries.In the north, they grow wild rice, which requires plenty of rainfall. In the south, they grow wheat, which requires a moderate amount of rainfall too much rainfall is bad for wheat production).One year, there is a record rainfall.This results in
A)the production possibilities frontier becoming linear.
B)the production possibilities frontier rotating, with the wild rice intercept increasing, and the wheat intercept decreasing.
C)a parallel shift inward of the production possibilities frontier.
D)the production possibilities frontier rotating, with the wild rice intercept decreasing, and the wheat intercept increasing.
E)a parallel shift outward of the production possibilities frontier.

Question

Quizplus · Accepted Answer

The record rainfall would benefit the wild rice production in the north due to its requirement for plenty of rainfall, increasing its potential output. Conversely, the wheat production in the south would suffer because it requires moderate rainfall, and too much is detrimental. This scenario leads to the production possibilities frontier (PPF) rotating, with the wild rice intercept increasing (due to increased production capability) and the wheat intercept decreasing (due to decreased production capability).

Consider a Country That Has Two Industries