Chapter 40, Problem 2MCQ

To determine

The correct option that depicts economic growth, in the long run, using the production possibility curve.

Answer to Problem 2MCQ

Option a is correct.

Explanation of Solution

Explanation for the correct option:

a.

The outward shift of the PPC curve represents long-term economic growth which is shown below:

  

Graph 1

Therefore, option a is correct.

Explanation for incorrect options:

b.

Inward shift will reduce production thus economic growth cannot be ensured in the long run.

c.

Movement on the PPC curve represents the choice of production between two products.

d.

Similarly, movement from one point to another point will represent the production of one product is more than the production of another product.

e.

Movement beyond the PPC will represent the production beyond the availability of resources.

Economics Concept Introduction

Production possibility curve (PPC): PPC shows the graphical representation of a different combination of goods that can be produced by using an available factor of production.