Question

When there is an improvement in technology, holding all else constant, A. the production possibilities frontier will shift inward B. society faces larger opportunity costs from shifting productive resources from one use to another C. goods and services will increase in price D. the economy must have some idle resources E. the production possibilities frontier will shift outward

Answer 1

Option (E) is correct.

Step-by-step explanation:

Production possibility frontier curve is a graphical representation of the combination of two goods to be produced. If there is a technological advancement then as a result there is an increase in the productivity of the inputs.

This will increase the quantity of both the goods to be produced with the same level of resources. Hence, this will shift the production possibility frontier outward.