Exhibit 2-18 Production possibilities curves In Exhibit 2-18, a country is located at point A on its Year X production possibilities curve. In Year Y this same country is located at point B on its Year Y production possibilities curve. Which of the following could have brought about this outward shift in production possibilities curves?

Question

Exhibit 2-18  Production possibilities curves  In Exhibit 2-18, a country is located at point A on its Year X production possibilities curve. In Year Y this same country is located at point B on its Year Y production possibilities curve. Which of the following could have brought about this outward shift in production possibilities curves?

Quizplus · Accepted Answer

An advance in technology occurred in Year X. This would allow the country to produce more goods and services with the same amount of resources, resulting in an outward shift of the production possibilities curve. Option A is incorrect because more efficient production would only shift the curve if it involves an increase in productivity, which is brought about by an advance in technology. Option B is incorrect because a natural disaster would lead to a decrease in resources and a shift inward of the curve. Option C is incorrect because higher unemployment would lead to a decrease in production and a shift inward of the curve.

Exhibit 2-18 Production Possibilities Curves in Exhibit 2-18, a Country