The diagram below shows two production possibilities boundaries for Country X. FIGURE 1- 3
-Refer to Figure 1- 3. A shift of the production possibilities boundary from PPB1 to PPB2 implies
A) that if point E is the new choice of outputs, productivity has increased in the consumption goods industry.
B) a movement from full employment to some unemployment.
C) that technology in the capital goods industries has improved.
D) that technology in the consumption goods industry has improved.
E) an inevitable decrease in total output.

Question

The diagram below shows two production possibilities boundaries for Country X.  FIGURE 1- 3
-Refer to Figure 1- 3. A shift of the production possibilities boundary from PPB1 to PPB2 implies
A) that if point E is the new choice of outputs, productivity has increased in the consumption goods industry. 
B) a movement from full employment to some unemployment. 
C) that technology in the capital goods industries has improved. 
D) that technology in the consumption goods industry has improved. 
E) an inevitable decrease in total output.

Quizplus · Accepted Answer

A shift from PPB1 to PPB2 indicates an outward shift of the production possibilities boundary, which typically implies an improvement in technology or an increase in resources. Since the shift is from PPB1 to PPB2, it suggests that technology in the capital goods industries has improved, allowing for more production possibilities.

The Diagram Below Shows Two Production Possibilities Boundaries for Country