Answer to Question #71076 in Microeconomics for Aira

Question

The EU produces only two goods: food and cars. Demographic trends in the EU are currently
unfavourable:due to population aging a lot of engineers in the production of carswill retire.

a.Use the transformation curve and depict how this retirement process will impact the economy in comparisonto today (hint: draw first initial situation then change the curve appropriately).

b.EU is currently facing also large migrant inflow, which represent potential workforce.
Manufacturers hope to use them to replace retired workers. However, the retired persons are primarily engineers, who work in automotiveproduction, while the migrants are generally less skilled and are more appropriate for food production.Depict how this migrant inflow will impact the transformation curve. Compare both curves(impact of retired and migrant inflow)!