Suppose that an economy produces civilian goods and military goods.If technological breakthroughs increase its ability to produce military goods,then

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Quizplus · Accepted Answer

Technological breakthroughs that increase the ability to produce military goods will shift the production possibilities frontier outward around the axis for military goods. This means that the economy can now produce more military goods while still producing the same amount of civilian goods as before or can produce the same amount of military goods while producing more civilian goods. This is because the technology breakthroughs will increase the productivity of the resources used to produce military goods, freeing up resources that can be used to produce civilian goods. Therefore, choice E is the correct answer.

Suppose That an Economy Produces Civilian Goods and Military Goods