Scenario 4-1
In a given year, country A exported $12 million worth of goods to country B and $6 million worth of goods to country C; country B exported $4 million worth of goods to country A and $7 million worth of goods to country C; and country C exported $5 million worth of goods to country A and $2 million worth of goods to country B.
-Which of the following will possibly cause a leftward shift in the production possibility curve, representing good X and good Y?
A)A decrease in a country's GDP
B)An increase in the price of good X
C)An increase in the price of good Y
D)A decrease in the price of good Y
E)A decrease in the price of good X

Question

Scenario 4-1
In a given year, country A exported $12 million worth of goods to country B and $6 million worth of goods to country C; country B exported $4 million worth of goods to country A and $7 million worth of goods to country C; and country C exported $5 million worth of goods to country A and $2 million worth of goods to country B.
-Which of the following will possibly cause a leftward shift in the production possibility curve, representing good X and good Y?​
A)​A decrease in a country's GDP
B)​An increase in the price of good X
C)​An increase in the price of good Y
D)​A decrease in the price of good Y
E)​A decrease in the price of good X

Quizplus · Accepted Answer

A decrease in a country's GDP can lead to a leftward shift in the production possibility curve because it reflects a reduction in the country's ability to produce goods and services, potentially due to lower resources or productivity. Changes in the prices of goods (options B, C, D, E) do not directly cause shifts in the production possibility curve, which represents the maximum possible output of two goods given available resources and technology, not the market prices of those goods.

Scenario 4-1 In a Given Year, Country a Exported $12 Million Worth