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Suppose an Economy Produces Two Goods,food and Machines

Question 268

Multiple Choice

Suppose an economy produces two goods,food and machines.This economy always operates on its production possibilities frontier.Last year,it produced 50 units of food and 30 machines.This year it experienced a technological advance in its machine-making industry.As a result,this year the society wants to produce 55 units of food and 30 machines.Which of the following statements is correct?


A) Because the technological advance occurred in the machine-making industry,it will not be possible to increase food production without reducing machine production below 30.
B) Because the technological advance occurred in the machine-making industry,increases in output can only occur in the machine industry.
C) In order to increase food production in these circumstances without reducing machine production,the economy must reduce inefficiencies.
D) The technological advance reduced the amount of resources needed to produce 30 machines,so these resources could be used to produce more food.

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