Question

An outward shift in the production possibility curve implies that ________.

• A. for more of one commodity, the others have been sacrificed.
• B. the cost of production rises.
• C. the unemployment has increased.
• D. increase in the productive resources.

Answer 1

The correct option is D increase in the productive resources.

The production possibility frontier will shift outward when there is and increase in the productive resources. Where there is advancement of technology or increase in availability of resources or introduction of a production method with improved efficiency in respect to both the goods, then PPF will shift to the right, i.e. outwards. This is because the more of both are goods are being produced due to the above factors.