Figure: Production Possibilities and Circular-Flow Diagram

question 215

Essay

Figure: Production Possibilities and Circular-Flow Diagram
(Figure: Production Possibilities and Circular-Flow Diagram) Look at the figure Production Possibilities and Circular-Flow Diagram.Assume the two figures represent the same economy.Suppose that in the circular-flow diagram there is a significant increase in the amount of human capital that flows to both types of firms (coconut producers and fish producers).If all other variables remain unchanged, then the adjustment in this economy would be best represented in the production possibilities figure by a movement from point A toward:
A.point A (no movement would occur).
B.point B (an increase in fish production).
C.point C (a decrease in coconut production).
D.point D (an outward shift of the entire curve).

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