Question

A shift from steam engines to diesel and electric engines has increased carrying capacity of the Indian Railways both for the passenger traffic and the goods traffic. Which one of these Production Possibility Curves correctly reflects the change?

• A.
• B.
• C.
• D.

Answer 1

The correct option is A

In the given diagram X axis shows passenger traffic and Y axis shows goods traffic. Increase in carrying capacity of the Indian Railways (both for the passenger traffic and goods traffic) implies a shift in its potential level of output due to better technology. Diagrammatically, it is indicated by a shift in the PPC to the right from ab to cd, as shown in the figure.