10 0 0 10 20 30 40 50 60 70 80 90 100 CONSUMER GOODS (Millions of units) By producing capital goods over and above the amount necessary to replenish the stock of depreciated capital, an economy can increase its productivity. In this case, will experience greater economic growth in the future. This graph shows the PPCs for the two countries in 2014. CAPITAL GOODS (Millions of units) 100 90 80 PPC₁ 70 + Gandhar 60 50 40 30 20 10 PPC2 Dwarika 0 10 20 30 40 50 60 70 80 90 100 CONSUMER GOODS (Millions of units) ? The green curve (PPC1) belongs to and the orange curve (PPC2) belongs to In 2014, both Gandhar and Dwarika experience significant population growth. To satisfy the needs of their growing populations, Gandhar must produce 70 million units of consumer goods and Dwarika must produce 50 million units of consumer goods. Use the black point (X symbol) to show on the graph the combination of goods that would be produced in Gandhar in 2014. Then use the purple point (diamond symbol) to show the combination of goods that would be produced in Dwarika in 2014. Gandhar produces capital goods in 2014 than in 2013. This means savings and thus investment. The productivity of Gandhar can be expected to be in 2015. This is an example of 5. Capital investment in less-developed countries The following graph shows the production possibilities curves (PPCS) of two hypothetical countries, Dwarika and Gandhar. Each economy produces only two sets of goods, consumer goods and capital goods. Although both countries had identical production capabilities in 2013, Gandhar had a larger population and a greater need for consumer goods. In 2013, Gandhar produced 60 million units of consumer goods and just enough capital to replace the existing capital that was worn out in that year. Dwarika produced only 40 million units of consumer goods and more than enough capital goods to replenish its depreciated capital. Assume that both countries produce efficient levels of output. On the following graph, use the black point (X symbol) to show the combination of goods that were produced in Gandhar in 2013. Dashed drop lines will automatically extend to both axes. Then use the purple point (diamond symbol) to show the combination of goods that were produced in Dwarika in 2013. CAPITAL GOODS (Millions of units) 100 90 80 + Gandhar 70 PPC of Both Countries Dwarika 50 30 10 0 + + 0 10 20 30 40 50 60 70 80 90 100 CONSUMER GOODS (Millions of units) (?) By producing capital goods over and above the amount necessary to replenish the stock of depreciated capital, an economy can increase its productivity. In this case, will experience greater economic growth in the future. This graph shows the PPCs for the two countries in 2014. 100 90 + (?)