Question

Suppose an economy is modeled with a production possibilities frontier or curve (PPF) for butter (vertical axis) vs. guns (horizontal axis). Which of the following is most likely to shift the curve upward and outward, away from the origin?
a) shifting resources from butter to gun production
b) a general improvement in technology affecting production of all goods
c) a sudden and substantial expansion in consumer desire for butter
d) a decrease in the general level of education
e) pacifism becomes less popular, leading society to need more guns than butter

Answer 1

Answer: B - a general improvement in technology affecting production of all goods

Explanation: The Production Possibility Frontier is a curve that shows the two combination of goods an economy can produce when all its factors of production are efficiently used.

Technological progress shifts the curve outward, away from the origin as more output would be produced using the same combination of factor inputs.

Shifting of resources from butter to gun would lead to movements along the curve as more gun would be produced and less butter.

Pacifism becoming less popular which increases gun production, would cause movement along the curve.

Increase in consumer desire for butter increase the amount of butter produced . This would generate a movement along the curve