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nsdq007 nsdq007
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2 months ago

The diagram below shows two production possibilities boundaries for Country X.

Short description: A graph plots consumer goods against capital goods. Long description: The horizontal axis represents consumer goods. The vertical axis represents capital goods. The graph plots two concave down decreasing curves. The first curve, P P B subscript 1 begins at a point on the vertical axis, passes through the points, F, A, and B, and ends at a point on the horizontal axis. The second curve, P P B subscript 2 begins at a point on the vertical axis (above the point where the first curve begins), passes through a point, E, and ends at a point on the horizontal axis (to the right of the first curve). The point, C lies near the horizontal axis and parallel to A. The point, D is to the right of point E.

FIGURE 1-4

Refer to Figure 1-4. Suppose Country X is currently producing at point E. Country X could achieve production at point D if



▸ firms reduced output of capital goods.

▸ the given resources were fully employed.

▸ the given resources were more efficiently employed.

▸ the prices of capital goods and consumption goods fell.

▸ sufficient improvements in technology occurred in either the capital goods industry or the consumer goods industries.
Textbook 

Microeconomics


Edition: 17th
Author:
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bijin05bijin05
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More solutions for this book are available here
sufficient improvements in technology occurred in either the capital goods industry or the consumer goods industries.

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