(a)[8]
Explain, with the help of diagrams, how (i) constant and (ii) increasing opportunity costs influence the shape of an economy’s production possibility curve.
- Explain, with the help of diagrams, how constant opportunity costs affect the shape of an economy’s production possibility curve. [4]
- Explain, with the help of diagrams, how increasing opportunity costs affect the shape of an economy’s production possibility curve. [4]
(b)[12]
Discuss which transition issues are likely to be most significant for a country as it changes from a planned economy to a mixed economy.