Final answer:
The shift from D1 to D2 on the production possibilities curve is caused by improvements in technology or the introduction of new resources that are specific to the production of capital goods, not consumer goods.
Step-by-step explanation:
The question associates with a movement on the production possibilities curve (PPC), which represents different trade-offs between two choices, here, capital goods and consumer goods. The shift from D1 to D2 on the PPC can be caused by several factors, but in this case, the correct cause is an improvement in technology or the introduction of new resources that are specific to the production of capital goods. This would lead to an outward shift of the production possibilities frontier for capital goods without the same effect on consumer goods, allowing the economy to produce more capital goods without producing less consumer goods.
It's important to understand that general technological improvements that affect the production of both types of goods would shift the entire PPC outward, and loss of resources would likely shift the PPC inward. The unique point here is that the resources or technology are only applied to the production of capital goods, not consumer goods, hence option C is the correct answer.
This type of analysis is fundamental in the study of economics, particularly when assessing how changes within an economy can lead to different levels of production efficiency and growth.