A production possibilities frontier shifts outward when a. the desires of the economy's citizens change. b. the economy experiences economic growth. c. at least one of the basic principles of economics is violated. d. opportunity costs are lessened.

Question

Georgia Randall

Business

26 July, 07:33

A production possibilities frontier shifts outward when a. the desires of the economy's citizens change. b. the economy experiences economic growth. c. at least one of the basic principles of economics is violated. d. opportunity costs are lessened.

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Mohammad Dominguez · Answer 1

The correct answer is b.

Explanation:

A production possibility frontier or curve shows the different combination of two goods that can be produced using limited resources.

This curve is concave to the origin because of increasing opportunity costs. This means as we increase the production of a good, the opportunity cost of giving up its alternative goes on increasing.

An outward shift in opportunity cost means that there is an increase in production. This shift is an indicator of economic growth. An inward shift, on the other hand, shows a reduction in production.

Production or output may increase because of the increase in inputs or because of improvement in technology.