Use the following to answer questions :
Figure 1-1
-Movement from frontier AE in Figure 1-1 to frontier A'E' would not be the result of
A)an increase in the stock of capital.
B)an increase in the labor force.
C)an increase in all prices at the same rate at the same time.
D)an increase in the supply of inexpensive energy.
E)none of the above.

Question

Use the following to answer questions :
Figure 1-1 
-Movement from frontier AE in Figure 1-1 to frontier A'E' would not be the result of
A)an increase in the stock of capital. 
B)an increase in the labor force. 
C)an increase in all prices at the same rate at the same time. 
D)an increase in the supply of inexpensive energy. 
E)none of the above.

Quizplus · Accepted Answer

Movement from AE to A'E' would result from an increase in efficiency, which would not be the result of an increase in all prices at the same rate at the same time. An increase in the stock of capital, an increase in the labor force, and an increase in the supply of inexpensive energy could all contribute to an increase in efficiency and thus a movement from AE to A'E'.

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