Question

Using a production possibilities curve, a technological advance that increases the amount of output for the same amount of inputs would be illustrated as a. a movement from a point on the curve to a point inside the curve. b. an outward shift of the curve. c. a flattening of the curve. d. a movement from one point to another point along the curve.

Answer 1

Answer: A technological advancement will result in an outward shift of the production possibility curve.

Explanation:

A production possibility curve (PPC) is a curve that shows the various combinations of the amounts of two goods that can be produced using the given resources and technology. It is a graphical representation that shows all possible output options for two products which can be produced utilizing all factors of production by efficiently utilizing the given resources and time.

A production possibility curve shows several economic concepts like economies of scale, allocative efficiency, productive efficiency, opportunity cost and scarcity.

An outward shift of the production possibility curve means there's an improvement in the economy as more goods are produced with the same inputs. A technology advancement will lead to an outward shift of the production possibility curve. This means that more goods will be produced by using the same amount of inputs.