The diagram below shows two production possibilities boundaries for Country X.
FIGURE 1- 4
-Refer to Figure 1- 4.A shift of the production possibilities boundary from PPB1 to PPB2 implies
A)that technology in the consumer goods industry has improved.
B)that technology in the capital goods industries has improved.
C)an inevitable decrease in total output.
D)a movement from full employment to some unemployment.
E)that if point E is the new choice of outputs,productivity has increased in the consumer goods industry.

Question

The diagram below shows two production possibilities boundaries for Country X.
  FIGURE 1- 4
-Refer to Figure 1- 4.A shift of the production possibilities boundary from PPB1 to PPB2 implies
A)that technology in the consumer goods industry has improved. 
B)that technology in the capital goods industries has improved. 
C)an inevitable decrease in total output. 
D)a movement from full employment to some unemployment. 
E)that if point E is the new choice of outputs,productivity has increased in the consumer goods industry.

Quizplus · Accepted Answer

A shift from PPB1 to PPB2 implies an improvement in technology in the capital goods industry, which allows for more efficient and productive production of capital goods. This in turn increases the economy's capacity to produce both capital and consumer goods, resulting in a shift of the production possibilities boundary outward. Choices A, C, D, and E are incorrect because they do not accurately reflect the implications of a shift in the production possibilities boundary from PPB1 to PPB2.

The Diagram Below Shows Two Production Possibilities Boundaries for Country