The economy below has a linear production possibility frontier, given by C=Y-G/q. The government has become more efficient at producing the public good (q increases from q1 to q2), which produces a rotation in the production possibility frontier. The private good (c) is a normal good. The public good is, however, an inferior good. In which area (1,2,3) will the indifference curve of the consumer be after the change? 1

The economy below has a linear production possibility frontier, given by C=Y-G/q. The government has become more efficient at producing the public good (q increases from q1 to q2), which produces a rotation in the production possibility frontier. The private good (c) is a normal good. The public good is, however, an inferior good. In which area (1,2,3) will the indifference curve of the consumer be after the change? 1

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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