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-(Figure: Production Possibilities and Circular-Flow Diagram)Use Figure: Production Possibilities and Circular-Flow Diagram.Assume the two figures represent the same economy.Suppose that in the circular-flow diagram capital that used to flow to firms producing coconuts now flows to firms producing fish.This adjustment in the economy would be BEST represented in the production possibilities figure by a move from point A toward:
A)point A (no movement).
B)point B (a decrease in coconut production and an increase in fish production).
C)point C (a decrease in coconut production).
D)point D (an outward shift of the entire curve).

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Use the following to answer question:

-(Figure: Production Possibilities and Circular-Flow Diagram)Use Figure: Production Possibilities and Circular-Flow Diagram.Assume the two figures represent the same economy.Suppose that in the circular-flow diagram capital that used to flow to firms producing coconuts now flows to firms producing fish.This adjustment in the economy would be BEST represented in the production possibilities figure by a move from point A toward:
A)point A (no movement). 
B)point B (a decrease in coconut production and an increase in fish production). 
C)point C (a decrease in coconut production). 
D)point D (an outward shift of the entire curve).

Quizplus · Accepted Answer

A change in the circular-flow diagram from capital flowing to coconut firms to fish firms will lead to a decrease in coconut production and an increase in fish production. This can be represented in the production possibilities figure by a movement from point A toward point B, which represents a decrease in coconut production and an increase in fish production.

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