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Refer to the information provided in Figure 1 below. Which of the following causes the ppf to shift from ppf2 to ppf3? Group of answer choices Technological progress An increase in the labor force An increase in capital stock All of the above

Refer to the information provided in Figure 1 below. Which of the following causes the ppf to shift from ppf2 to ppf3? Group of answer choices Technological progress An increase in the labor force An increase in capital stock All of the above

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Refer to the information provided in Figure 1 below. Which of the following causes the ppf to shift from ppf2 to ppf3?

 

  

Group of answer choices
Technological progress
An increase in the labor force
An increase in capital stock
All of the above
 
The image presents a series of Production Possibility Frontiers (PPFs) illustrating the trade-offs between producer goods and consumer goods. ### Graph Explanation - **Axes**: - The horizontal axis represents consumer goods. - The vertical axis represents producer goods. - **Curves**: - The graph includes three concave curves labeled \(ppf_1\), \(ppf_2\), and \(ppf_3\). - Each curve represents a different level of production capacity. - Moving from \(ppf_1\) to \(ppf_3\) shows an outward shift, indicating an increase in production capacity or resources. - **Points**: - **Point D**: Located inside \(ppf_1\), suggesting underutilization of resources. - **Point A**: Lies on \(ppf_1\), representing efficient use of resources at an initial capacity. - **Point B**: Situated on \(ppf_2\), showing efficient production with increased capacity or resource availability. - **Point C**: Found on \(ppf_3\), indicating the highest level of resource utilization and production capacity in the given scenario. ### Educational Implications This diagram is commonly used in economics to visualize the concept of opportunity cost and efficient resource allocation. The outward shift from \(ppf_1\) to \(ppf_3\) may result from factors such as technological advancements or increases in available resources, enabling greater production of both producer and consumer goods without sacrificing one for the other. Points on each curve represent efficient production levels, while points inside the curves indicate resource underutilization.
Transcribed Image Text:The image presents a series of Production Possibility Frontiers (PPFs) illustrating the trade-offs between producer goods and consumer goods. ### Graph Explanation - **Axes**: - The horizontal axis represents consumer goods. - The vertical axis represents producer goods. - **Curves**: - The graph includes three concave curves labeled \(ppf_1\), \(ppf_2\), and \(ppf_3\). - Each curve represents a different level of production capacity. - Moving from \(ppf_1\) to \(ppf_3\) shows an outward shift, indicating an increase in production capacity or resources. - **Points**: - **Point D**: Located inside \(ppf_1\), suggesting underutilization of resources. - **Point A**: Lies on \(ppf_1\), representing efficient use of resources at an initial capacity. - **Point B**: Situated on \(ppf_2\), showing efficient production with increased capacity or resource availability. - **Point C**: Found on \(ppf_3\), indicating the highest level of resource utilization and production capacity in the given scenario. ### Educational Implications This diagram is commonly used in economics to visualize the concept of opportunity cost and efficient resource allocation. The outward shift from \(ppf_1\) to \(ppf_3\) may result from factors such as technological advancements or increases in available resources, enabling greater production of both producer and consumer goods without sacrificing one for the other. Points on each curve represent efficient production levels, while points inside the curves indicate resource underutilization.
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