Suppose an economy produces two goods: food and machines.This economy always operates on its production possibilities frontier.Last year,it produced 91 units of food and 48 machines.This year,it is producing 95 units of food and 51 machines.Which of the following would NOT explain the increase in output

Question

Quizplus · Accepted Answer

A reduction in unemployment would move the economy from inside the production possibilities frontier to a point on the frontier, not beyond it. Since the economy was already operating on the frontier, this cannot explain the increase in output.

Suppose an Economy Produces Two Goods: Food and Machines