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 fromPPB1 to PPB2 indicates which of the following?
A)an increase in the price of raw materials for consumer goods
B)growth in the countryʹs productive capacity
C)an increase in the price of raw material for capital goods
D)more of the countryʹs resources are being used
E)the countryʹs 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 fromPPB1 to PPB2 indicates which of the following?
A)an increase in the price of raw materials for consumer goods 
B)growth in the countryʹs productive capacity 
C)an increase in the price of raw material for capital goods 
D)more of the countryʹs resources are being used 
E)the countryʹs resources are being used less efficiently

Quizplus · Accepted Answer

An outward shift of the production possibilities boundary from PPB1 to PPB2 indicates growth in the country's productive capacity, meaning the country has increased its ability to produce both goods. This could be due to technological advancements, increased capital investment, or improvements in labor productivity.

The Diagram Below Shows Two Production Possibilities Boundaries for Country