If a new labor-saving technology is discovered,
A)the production possibilities curve remains unchanged.
B)the production possibilities curve shifts inward.
C)there is movement along the production possibilities curve.
D)society does not face a new set of tradeoffs.
E)points that were previously unattainable to society may now be attainable.

Question

Quizplus · Accepted Answer

The discovery of a labor-saving technology would lead to an increase in productivity, enabling society to produce more goods and services with fewer resources. This means that points on the production possibilities curve that were previously unattainable may now be attainable, hence the correct answer is E. The other options are incorrect because the discovery of a technology would lead to a shift outward in the production possibilities curve, rather than remaining unchanged or shifting inward. Similarly, the discovery of a technology would create a new set of tradeoffs since resources would have to be allocated differently to take advantage of the technology, making D is also incorrect. Finally, there would not be a movement along the curve, but rather a shift in the curve.

If a New Labor-Saving Technology Is Discovered