Question

There is a production possibilities frontier (PPF) that shows the combinations of goods X and Y that can be produced in the economy. The point where the PPF touches the good-X axis is at 40 units of good X and the point where the PPF touches the good-Y axis is at 60 units. As a result of an increase in resources that can be used for the production of both goods, the PPF a.shifts leftward, and the point at which the PPF touches the good-X axis has to be something less than 40 units of good X. b.shifts rightward, and the point at which the PPF touches the good-X axis has to be something more than 40 units of good X and the point at which the PPF touches the good-Y axis has to be something more than 60 units. c.shifts leftward, and the point at which the PPF touches the good-X axis has to be something less than 40 units of good X and the point at which the PPF touches the good-Y axis has to be something less than 60 units. d.shifts rightward, and the point at which the PPF touches the good-X axis has to be something more than 40 units of Y and the point at which the PPF touches the good-Y axis has to be something less than 60 units. e.none of the above

Answer 1

Answer:

B. shifts rightward, and the point at which the PPF touches the good-X axis has to be something more than 40 units of good X and the point at which the PPF touches the good-Y axis has to be something more than 60 units

Explanation:

PPF is the graphical representation of two goods combinations which an economy can produce given resources & technology.

It is downward sloping because of two goods inverse relation given same resources & technology.

The points at which PPF touches both axis represents maximum amount of that axis good which can be produced by given resources & technology , Points on PPF reflect full efficient utilisation of resources. Points inside PPF reflect underutilisation of resources. Points outside PPF reflect unattainable combinations outside economy's productive capacity, given resources & technology unless either of them grow.

Resource increase usable for production of both goods: shifts the PPF outwards/ rightwards & the maximum potential production of both goods increases. PPF touching axis points increases from pervious at each axis - more than 40 at good X axis, more than 60 at Y axis.