Question

Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs) for consumer goods and capital goods, but country 1 produces twice the output of both types of goods compared to country 2. It follows that

A. country 1's PPF lies further to the right than country 2's PPF.
B. country 1 has a smaller population than country 2.
C. country 1 has a bigger population than country 2.
D. country 1 is efficient and country 2 is inefficient. none of the above

Answer 1

A) Country 1's PPF lies further to the right than country 2's PPF.

Step-by-step explanation:

Production Possibility Curve shows the combination of two goods, that an economy can produce - by utilising given resources & technology best efficiently.

If country 1 produces twice the output of both goods compared to country 2. Then, country 1's PPF would lie further to the right than country 2's PPF. As, more quantities implies rightward shifted PPC, signifying more quantities of goods that can be produced.

Efficient or inefficient production leads to production inside or on PPC, doesn't shift PPC. Population change is also irrelevant in this case.