Ceteris paribus when technological change allows a smaller amount of a resource to be used in producing any combination of two goods,there will be:
A) A movement along the production possibilities curve.
B) An outward shift of the production possibilities curve.
C) An inward shift of the production possibilities curve.
D) No change in the production possibilities curve.

Question

Quizplus · Accepted Answer

Technological change that allows a smaller amount of a resource to be used in producing any combination of two goods results in an increase in productivity, which leads to an outward shift of the production possibilities curve, indicating that more of both goods can be produced.

Ceteris Paribus When Technological Change Allows a Smaller Amount of a Resource