Exhibit 2-11 Production possibilities curves

In Exhibit 2-11, which of the following could have caused the production possibilities curve of an economy to shift from the one labeled A to the one labeled B?

Question

Exhibit 2-11 Production possibilities curves

In Exhibit 2-11, which of the following could have caused the production possibilities curve of an economy to shift from the one labeled A to the one labeled B?

Quizplus · Accepted Answer

The production possibilities curve shift from A to B indicates an increase in the economy's productive capacity, which can be caused by an advance in technology. A major natural disaster (A) would decrease the economy's productive capacity and shift the curve inward. An increase in consumption goods production (B) would move the economy along the same curve but not shift it. An increase in unemployment (D) would also shift the curve inward as fewer resources are available for production.

Exhibit 2-11 Production Possibilities Curves