Use the figure below to answer the following questions.

Figure 26.1.1
-Refer to Figure 26.1.1. Which graph illustrates what happens when factor prices decrease?
A)(a)
B)(b)
C)(c)
D)(d)
E)(a)and (b)

Question

Use the figure below to answer the following questions.
  
Figure 26.1.1
-Refer to Figure 26.1.1. Which graph illustrates what happens when factor prices decrease?
A)(a) 
B)(b) 
C)(c) 
D)(d) 
E)(a)and (b)

Quizplus · Accepted Answer

Graph (a) illustrates what happens when factor prices decrease. As the cost of inputs decreases, the production possibilities frontier (PPF) will shift outwards, allowing for a greater output of goods and services. This is shown by the movement from PPF1 to PPF2.

Use the Figure Below to Answer the Following Questions