A short-run increase in capacity utilization
A)Shifts the production possibilities curve rightward.
B)Shifts the production possibilities curve leftward.
C)Moves the economy to a point closer to its existing production possibilities curve.

Question

Quizplus · Accepted Answer

A short-run increase in capacity utilization means that existing resources are being used more efficiently, but it does not mean that new resources are being added. Therefore, it does not shift the production possibilities curve either leftward or rightward. Instead, it moves the economy to a point closer to its existing production possibilities curve, allowing for a temporary increase in output.

A Short-Run Increase in Capacity Utilization