Figure 2-11 Mercedes Benz produces a full line of luxury automobiles, including coupes, sedans, and SUVs, at a variety of manufacturing plants across the globe. Assume Mercedes Benz produces both coupes and SUVs at its Tuscaloosa, Alabama factory. Figure 2-11 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions at this factory.
-An increase in the labor force shifts the production possibility frontier inwards over time.

Question

Figure 2-11  Mercedes Benz produces a full line of luxury automobiles, including coupes, sedans, and SUVs, at a variety of manufacturing plants across the globe. Assume Mercedes Benz produces both coupes and SUVs at its Tuscaloosa, Alabama factory. Figure 2-11 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions at this factory.
-An increase in the labor force shifts the production possibility frontier inwards over time.

Quizplus · Accepted Answer

The statement is incorrect. An increase in the labor force would generally shift the production possibilities frontier outward as it allows for a higher level of production.

Figure 2-11 Mercedes Benz Produces a Full Line of Luxury