Refer to the graphs. An increase in an economy's labor productivity would shift curve
A) AB to CD and shift curve Y to X.
B) CD to AB and shift curve X to Y.
C) AB to CD and shift curve X to Y.
D) X to Y, while leaving curve AB in place.

Question

Refer to the graphs. An increase in an economy's labor productivity would shift curve
A) AB to CD and shift curve Y to X. 
B) CD to AB and shift curve X to Y. 
C) AB to CD and shift curve X to Y. 
D) X to Y, while leaving curve AB in place.

Quizplus · Accepted Answer

An increase in labor productivity would result in a shift of the production possibility curve from AB to CD, as the economy is able to produce more output with the same amount of inputs. This would also result in a shift of the demand curve from X to Y, as consumers would demand more goods and services due to the increase in productivity. Therefore, the correct answer is C, as it reflects both of these shifts.

Refer to the Graphs