The following figure has four graphs showing the production possibilities frontier for capital goods and consumer goods. Assuming an influx of immigrants benefits the production of both consumer and capital goods, which of the graphs below best illustrates the impact on the production possibilities frontier?
Definitions:
Perfectly Elastic
Describes a situation in which the quantity demanded or supplied changes by an infinite amount in response to any price change, depicted as a horizontal line on a graph.
Long-run Equilibrium
A state in which all factors of production are variable, leading to a situation where firms only earn normal profits and no incentives exist for entering or exiting the industry.
Short-run Equilibrium
The condition in which the quantity supplied equals the quantity demanded at a particular price level, but only over a short period.
Purely Competitive Firm
A company operating in a market where there are many buyers and sellers, with none being able to influence the market price significantly.
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