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

Question

Quizplus · Accepted Answer

The record rainfall benefits wild rice production in the north but harms wheat production in the south, causing the production possibilities frontier to rotate, increasing the wild rice intercept and decreasing the wheat intercept.

Consider a Country That Has Two Industries