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1. Draw a bowed-out production possibilities curve (PPC) with an aggregate measure of medical services,
Q, on the horizontal axis and an aggregate measure of all other goods (and services), Z, on the vertical
axis. Discuss the implications of the following changes on the quantities of medical services and all other
goods.
A. A movement down along the curve.
B. A movement from the interior of the curve to a northeasterly point on the curve.
C. An increase in the quantity of labor in the economy.
D. A technological discovery that increases the production of Z.
E. If it were your choice, where would you choose to produce on the PPC? Why?
F. Draw a PPC to illustrate at least one technically efficient resource allocation between medical
services and all other goods.

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