The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4 Refer to Figure 1-4.An outward shift of the production possibilities boundary from to indicates which of the following?
A)an increase in the price of raw materials for consumer goods
B)growth in the country's productive capacity
C)an increase in the price of raw material for capital goods
D)more of the country's resources are being used
E)the country's resources are being used less efficiently

Question

The diagram below shows two production possibilities boundaries for Country X.  FIGURE 1-4 Refer to Figure 1-4.An outward shift of the production possibilities boundary from  to  indicates which of the following?
A)an increase in the price of raw materials for consumer goods 
B)growth in the country's productive capacity 
C)an increase in the price of raw material for capital goods 
D)more of the country's resources are being used 
E)the country's resources are being used less efficiently

Quizplus · Accepted Answer

An outward shift of the production possibilities boundary indicates growth in the country's productive capacity, meaning the country is now able to produce more of both goods. This can be due to technological advancements, an increase in resources, or an improvement in the efficiency of resource allocation. None of the other options provided account for an increase in productivity or capacity.

The Diagram Below Shows Two Production Possibilities Boundaries for Country