-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy chose the point on this year's PPF that is below point K,the next year's PPF would
A) shift outward along the horizontal axis farther than the new PPF shown in the figure.
B) shift outward along the horizontal axis, but not as far as the new PPF shown in the figure.
C) shift outward along the vertical axis, not along the horizontal axis.
D) shift inward along the horizontal axis.
E) shift inward along the vertical axis.

Question

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy chose the point on this year's PPF that is below point K,the next year's PPF would
A) shift outward along the horizontal axis farther than the new PPF shown in the figure. 
B) shift outward along the horizontal axis, but not as far as the new PPF shown in the figure. 
C) shift outward along the vertical axis, not along the horizontal axis. 
D) shift inward along the horizontal axis. 
E) shift inward along the vertical axis.

Quizplus · Accepted Answer

Choosing a point below K on this year's PPF indicates that the economy is investing more in cell-phone factories (capital goods) than in producing cell phones (consumer goods) this year. This investment increases the economy's capacity to produce more cell phones in the future, leading to an outward shift of the PPF along the horizontal axis. However, since resources are finite and some are being used for capital goods rather than for immediate production of cell phones, the shift won't be as significant as if the economy had chosen a point like K, which represents an optimal balance of current production and investment for future growth.

-The Figure Above Shows How the PPF for Cell Phones