Exhibit 2.5

-Refer to Exhibit 2.5, which shows the production possibilities frontier for capital goods and consumer goods. Which of the graphs given best illustrates the impact on the production possibilities frontier of a technological improvement that will make the use of the resources used to produce consumer goods more efficient?

Question

Exhibit 2.5
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-Refer to Exhibit 2.5, which shows the production possibilities frontier for capital goods and consumer goods. Which of the graphs given best illustrates the impact on the production possibilities frontier of a technological improvement that will make the use of the resources used to produce consumer goods more efficient?

Quizplus · Accepted Answer

A technological improvement in the production of consumer goods would shift the production possibilities frontier outward for consumer goods, indicating an increase in the maximum possible output of consumer goods while capital goods remain unchanged.

Exhibit 2.5 ​

Exhibit 2.5