In Figure 1.3,a shift of the production possibilities curve from PP1 to PP2 could be caused by
A)A decrease in the quantity of raw materials available.
B)A decline in the production skills of workers.
C)The use of improved production technology.
D)All of the choices are correct.

Question

In Figure 1.3,a shift of the production possibilities curve from PP1 to PP2 could be caused by
A)A decrease in the quantity of raw materials available. 
B)A decline in the production skills of workers. 
C)The use of improved production technology. 
D)All of the choices are correct.

Quizplus · Accepted Answer

The use of improved production technology can increase the efficiency and effectiveness of production, allowing for more output with the same amount of resources. This would result in a shift of the production possibilities curve from PP1 to PP2, indicating an increase in the potential maximum output of the economy. A decrease in the quantity of raw materials available (A) or a decline in the production skills of workers (B) would both result in a decrease in the potential maximum output, causing a shift of the curve inward. Therefore, only choice C is the best answer.