ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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increasing production
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decreasing production
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Either A or B
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None of the above
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Detailed explanation-1: -If an economy is working at a point left to PPF curve it shows that the economy is working at less than the full employment level. The PPC shifts towards the left, when there is a technological degradation and/or decrease in resources with respect to both the goods.
Detailed explanation-2: -What creates growth? When using a PPF, growth is defined as an increase in potential output over time, and illustrated by an outward shift in the curve. An outward shift of a PPF means that an economy has increased its capacity to produce all goods.
Detailed explanation-3: -The factors that lead to an outward shift in the PPF include the advancement in technology and improvement in human capital. Advancement in technology will lead to a higher level of per unit manufactured products for the given level of inputs.