Question

Using the diagram above, which of the following might have caused the outward movement of the production possibility frontier?:

a) An increase in unemployment
b) Technological advancement
c) A decrease in resource availability
d) A decrease in consumer demand

Answer 1

A decrease in resource availability might have caused the outward movement of the production possibility frontier.

Step-by-step explanation:

An improvement in technology that reduces the cost of production will cause an increase in supply. This can be shown as a rightward (or downward) shift in the supply curve. A decrease in resource availability, on the other hand, will cause a decrease in supply or a leftward (or upward) shift in the supply curve. Therefore, option c) a decrease in resource availability might have caused the outward movement of the production possibility frontier.