Exhibit 2-11 Production possibilities curves
In Exhibit 2-11, which of the following could have caused the production possibilities curve of an economy to shift from the one labeled A to the one labeled B?

Question

Exhibit 2-11 Production possibilities curves 
In Exhibit 2-11, which of the following could have caused the production possibilities curve of an economy to shift from the one labeled A to the one labeled B?

Quizplus · Accepted Answer

An advance in technology can increase the productivity of an economy. As a result, the economy can produce more goods and services with the same amount of resources or can produce the same amount of goods and services with fewer resources. This leads to an outward shift of the production possibilities curve, as shown by the shift from curve A to curve B. A major natural disaster, an increase in consumption goods production this year, and an increase in unemployment are unlikely to cause such a shift.

Exhibit 2-11 Production Possibilities Curves