The Diagram Below Shows Two Production Possibilities Boundaries for Country

question 9

Multiple Choice

The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
-Refer to Figure 1-4.A shift of the production possibilities boundary from PPB₁ to PPB₂ implies

• A)a movement from full employment to some unemployment.
• B)that if point E is the new choice of outputs,productivity has increased in the consumer goods industry.
• C)that technology in the capital goods industries has improved.
• D)an inevitable decrease in total output.
• E)that technology in the consumer goods industry has improved.

---

Definitions:

Constant Cost Industry

An industry wherein the costs of production do not change as the overall level of output increases or decreases.

Entry Barriers

Obstacles that prevent new competitors from easily entering an industry or area of business, including high startup costs, licensing requirements, and access to technology.

Zero Economic Profit

A situation where a firm's total revenue is exactly equal to its total opportunity costs, indicating no excess returns over the cost of capital.

Long Run

A period in which all factors of production and costs are variable, allowing for adjustments in production to meet changes in the market or economy.