Which of the following causes an outward shift in the Production Possibilities Curve?
A) A decrease in unemployment.
B) A loss in the productive capacity of agricultural acreage caused by a prolonged drought.
C) An increase in the productivity of all factors of production.
D) Shifting resources away from the production of one good toward another.

Question

Quizplus · Accepted Answer

An increase in the productivity of all factors of production means that more can be produced using the same resources, causing an outward shift in the production possibilities curve. A decrease in unemployment (choice A) may lead to more resources being available, but it does not necessarily increase productivity. A loss in the productive capacity of agricultural acreage caused by a prolonged drought (choice B) would result in a decrease in the amount of food that can be produced, causing an inward shift in the production possibilities curve. Shifting resources away from the production of one good toward another (choice D) would also cause a shift in the curve, but it would depend on the productivity of the new allocation of resources.

Which of the Following Causes an Outward Shift in the Production