Technological change is represented on a macro production possibilities frontier (PPF) by a(n)
A) movement along the PPF.
B) movement from a point inside the PPF to a point on the PPF.
C) point outside the PPF.
D) point inside the PPF.
E) outward shift of the PPF.

Question

Quizplus · Accepted Answer

Technological change causes an outward shift of the PPF, indicating an increase in the maximum amount of goods and services that can be produced with the given resources and technology. A movement along the PPF represents a tradeoff between producing different goods and services with the same resources and technology, while a movement from a point inside the PPF to a point on the PPF represents an increase in efficiency or utilization of resources. Points inside the PPF represent an inefficient use of resources, and points outside the PPF are unattainable given the current level of resources and technology.

Technological Change Is Represented on a Macro Production Possibilities Frontier