Explain why the following statement is True, False, or Uncertain? Suppose an economy produces...

Question:

Explain why the following statement is True, False, or Uncertain? Suppose an economy produces only cupcakes and croissants, according to a convex-to-origin production possibilities curve. If there is a technological improvement that affects only cupcake production, the economy could produce more of both goods.

Production Possibility Curve:

A curve that represents how much products and services an economy is able to manufacture if they use their entire set of resources and technology is called the production possibility curve. It is abbreviated as PPF or PPC.

Answer and Explanation: 1

This statement is False.

Explanation: The improvement in the technology of cupcake production will cause the PPC to rotate outward. Therefore, only the production of cupcakes will rise while that of croissants will remain the same.


Learn more about this topic:

Loading...
Production Possibilities Curve: Definition & Examples

from

Chapter 11 / Lesson 28

Understand what the production possibilities curve is, and learn how to construct and interpret a production possibilities curve along with the example.


Related to this Question

Explore our homework questions and answers library