Assume an economy is operating on its production possibilities curve, which shows the production of military and civilian goods. If the output of military goods is increased, the output of civilian goods:
A) will increase too.
B) will not change.
C) must decrease.
D) may increase or decrease.

Question

Quizplus · Accepted Answer

Since the economy is already operating on its production possibilities curve, increasing the output of military goods means shifting resources away from producing civilian goods. Therefore, the production of civilian goods must decrease.

Assume an Economy Is Operating on Its Production Possibilities Curve