What Happens to a Production Possibilities Frontier (With Capital Goods

question 175

Multiple Choice

What happens to a production possibilities frontier (with capital goods on the vertical axis and consumption goods on the horizontal axis) when there is technological improvement?

• A) The entire frontier shifts outward.
• B) The upper part shifts outward while the lower part shifts inward.
• C) Nothing;there is no movement of the frontier.
• D) The entire frontier shifts inward.
• E) The lower part of the curve shifts outward while the upper part shifts inward.

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Definitions:

Transformation Process

The method by which inputs (such as raw materials, information, or labor) are converted into outputs (products or services) by an organization.

Continuous Manufacturing Organizations

Companies that use continuously running assembly lines, creating products with many similar characteristics.