Economics 2281 · O Level · Production possibility curve (PPC) diagrams
Production possibility curve (PPC) diagrams — practice question
Russia’s birth rate decreased by $11\%$ in 2017, reaching its lowest level for a decade. Over the next $30$ years, Russia’s population is predicted to drop from $144$ million to $107$ million. The government introduced measures intended to halt this population decline. In 2017, it also set out privatisation plans and policies designed to stop a fall in investment, which could result in a reduction in the quantity of capital goods. Privatisation can weaken monopoly power in a market.
(a)[2]
Define privatisation in your own words.
(b)[4]
Explain two reasons for a reduction in the birth rate.
(c)[6]
Analyse, with the aid of a production possibility curve (PPC) diagram, the consequences of a reduction in the quantity of capital goods in an economy.
(d)[8]
Discuss whether a government ought to permit monopolies.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme.