Question

Consider a production possibilities boundary showing the quantity of military goods and the qumdity of civlian goods on the two axes. A movement along the production possibilities boundary could be caused by A) the employment of previously idle resources. B) the reallocation of resources between military and civilian goods. C) the growth of productive capacity. D) an increase in the labour supply E) technological progress.

Answer 1

Answer:

B) the reallocation of resources between military and civilian goods.

Explanation:

PPC is the graphical representation of product combinations that an economy can produce, given resources & technology.

Given same resources & technology, the two goods are inversely related - one good's quantity can be increased by decreasing the quantity of other good.

PPC is based on the assumption that resources are efficiently utilised & all points on PPC denote product combinations efficiently utilising resources.

So, movement along the PPC boundary means production level intact at full efficiency level & just reallocation of resources between good 1 to good 2, i.e here b/w military & civilian goods.