An improvement in technology
A)will always result in a parallel shift of the production possibilities frontier
B)will never result in a parallel shift of the production possibilities frontier
C)will be indicated as a movement along the production possibilities frontier
D)will shift the production possibilities frontier outward but not necessarily to a parallel position
E)may not shift the production possibilities frontier

Question

Quizplus · Accepted Answer

Technological improvements allow for more efficient production, resulting in an increase in potential output. This shifts the production possibilities frontier outward, but it does not necessarily have to be a parallel shift. The shape of the frontier may also change depending on how the technology affects the production of each good or service.

An Improvement in Technology