A long-run increase in capacity
A)Shifts the production possibilities curve rightward.
B)Shifts the production possibilities curve leftward.
C)Moves the economy to a point closer to its existing production possibilities curve.
D)Moves the economy upward to the left along its existing production possibilities curve.

Question

Quizplus · Accepted Answer

An increase in capacity means that the economy is able to produce more goods and services than before. This means that the production possibilities curve, which shows the maximum amount of goods or services that an economy can produce with its existing resources, will shift to the right. This is because the economy now has more resources available to produce goods and services, allowing it to produce more of both.

A Long-Run Increase in Capacity