The diagram below shows two production possibilities boundaries for Country X.
FIGURE 1-4
-Refer to Figure 1-4.A shift of the production possibilities boundary from PPB1 to PPB2 implies
A)a movement from full employment to some unemployment.
B)that if point E is the new choice of outputs,productivity has increased in the consumer goods industry.
C)that technology in the capital goods industries has improved.
D)an inevitable decrease in total output.
E)that technology in the consumer goods industry has improved.

Question

The diagram below shows two production possibilities boundaries for Country X.
  FIGURE 1-4
-Refer to Figure 1-4.A shift of the production possibilities boundary from PPB1 to PPB2 implies
A)a movement from full employment to some unemployment. 
B)that if point E is the new choice of outputs,productivity has increased in the consumer goods industry. 
C)that technology in the capital goods industries has improved. 
D)an inevitable decrease in total output. 
E)that technology in the consumer goods industry has improved.

Quizplus · Accepted Answer

A shift of the production possibilities boundary (PPB) from PPB1 to PPB2, especially if it allows for more production of capital goods (as indicated by a point like E being achievable), suggests that there has been an improvement in technology in the capital goods industries. This shift does not necessarily imply changes in employment levels, productivity limited to the consumer goods industry, a decrease in total output, or technological improvements confined to the consumer goods industry.

The Diagram Below Shows Two Production Possibilities Boundaries for Country