The effect of an increase in productive inputs such as labor and capital can be shown by a(n):
A)point inside of the production possibility frontier.
B)outward shift of the production possibility frontier.
C)movement from one point to another along the production possibility frontier.
D)inward shift of the production possibility frontier.

Question

Quizplus · Accepted Answer

An increase in productive inputs such as labor and capital will result in an increase in the potential output of an economy. This will cause the production possibility frontier to shift outward, indicating that more goods and services can be produced than before. Points inside the production possibility frontier (A) represent inefficient use of resources, movements from one point to another along the frontier (C) represent trade-offs between the production of different goods, and an inward shift of the frontier (D) represents a decrease in the amount of inputs available for production.

The Effect of an Increase in Productive Inputs Such as Labor