America turns its back on big department stores

January 14, 2020

America has turned its back on big department stores.

Questions

1. What agreement did Kohl’s make with Amazon and how did Kohl’s hope to benefit?

The United States produces retail services and other goods and services. Suppose that the PPF for the United States measures retail services on the x-axis and other goods and services on the y-axis. Use this information to answer the following questions.

2. What is the opportunity cost of producing retail services? How does the PPF illustrate this opportunity cost?
3. Does the closing of bricks-and-mortar retail outlets create a movement along the PPF or a shift of the PPF? Why?
4. Suppose that technological change expands the production possibilities of retail services with no change to the production possibilities of other goods and services. What is the effect on the PPF? Does the opportunity cost of producing retail services change? Does the opportunity cost of producing other goods and services change?
5. On a graph of the PPF, indicate a point of production efficiency. Then draw a point to show the effects of the closing of bricks-and-mortar retail outlets. Next show the effect of technological change that expands the production possibilities of retail services with no change to the production possibilities of other goods and services. Draw the new production point if production is efficient.
6. What is the effect of the closing of bricks-and-mortar stores and the technological change on the opportunity cost of retail services? Explain.