Refer to the information provided in Figure 2.6 below to answer the questions that follow. Figure 2.6
-Refer to Figure 2.6. Which of the following will shift an economy's production possibility frontier from ppf1 to ppf2?
A) a decrease in unemployment
B) an increase in production efficiency
C) a change in consumers' tastes
D) an increase in the economy's capital stock

Question

Refer to the information provided in Figure 2.6 below to answer the questions that follow.  Figure 2.6
-Refer to Figure 2.6. Which of the following will shift an economy's production possibility frontier from ppf1 to ppf2?
A) a decrease in unemployment 
B) an increase in production efficiency 
C) a change in consumers' tastes 
D) an increase in the economy's capital stock

Quizplus · Accepted Answer

An increase in the economy's capital stock will shift the production possibility frontier from ppf1 to ppf2 as it increases the economy's ability to produce goods and services. Option A, a decrease in unemployment, may lead to a more efficient utilization of resources but it will not shift the production possibility frontier. Option B, an increase in production efficiency, may lead to a point on the same production possibility frontier but not a shift to a new one. Option C, a change in consumers' tastes, may lead to a reallocation of resources and may shift the production possibility frontier in the long run, but as given in the diagram, it is not the specific factor causing the shift from ppf1 to ppf2.

Refer to the Information Provided in Figure 2