If an economy experiences an increase in its capital, everything else constant, then its...
Question:
If an economy experiences an increase in its capital, everything else constant, then its production possibilities frontier (PPF) will
a. Expand outward proportionally
b. Expand outward largely in the direction the labor intensive good.
c. Expand outward largely in the direction of the capital intensive good.
d. Not expand until labor grows
Production Possibility Frontier
The PPF is downward sloping. When it is concave to the origin, opportunity cost( which is also the slope of PPF ) increases. When it is a straight line, opportunity cost is constant. When the PPF is convex ( such type of PPF is extremely rare )opportunity cost declines.
Answer and Explanation:
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Production Possibilities Curve: Definition & Examples
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Chapter 11 / Lesson 28
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Understand what the production possibilities curve is, and learn how to construct and interpret a production possibilities curve along with the example.
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