Refer to the above graph. If the production possibilities curve of an economy shifts from AB to CD, it is most likely caused by which of the following factors?

Question

Quizplus · Accepted Answer

A shift from AB to CD on a production possibilities curve represents an increase in the economy's productive capacity, which is typically caused by technological progress. A decrease in the price level would not cause a shift in the production possibilities curve, allocative efficiency refers to the optimal allocation of resources within a given production possibilities curve and does not cause a shift, and full employment of resources may maximize production within the existing possibilities curve, but it would not cause a shift in the curve itself.

Refer to the Above Graph