A production possibilities frontier shifts outward when
a. the economy experiences economic growth.
b. the desires of the economy’s citizens change.
c. at least one of the basic principles of economics is violated.
d. opportunity costs are lessened.
The correct answer and explanation is :
Correct Answer:
a. The economy experiences economic growth.
Explanation:
The Production Possibilities Frontier (PPF) is a graphical representation of the maximum possible output combinations of two goods or services that an economy can produce, given its available resources and technology. A shift outward in the PPF indicates that the economy can produce more of both goods than before, reflecting economic growth.
Economic growth occurs when there is an increase in the economy’s productive capacity. This can happen due to several factors:
- Increase in Resources – When an economy acquires more land, labor, or capital, it can produce more goods and services. For example, an increase in the working-age population or the discovery of new natural resources leads to higher production potential.
- Technological Advancements – Innovations and improvements in production methods allow more efficient use of resources. For instance, automation in manufacturing can lead to higher output with the same amount of labor and capital.
- Investment in Human Capital – Education and training enhance worker productivity, making labor more efficient and skilled. A better-educated workforce can produce more goods and services, shifting the PPF outward.
- Improvements in Infrastructure – Better roads, communication networks, and transportation systems help businesses operate more efficiently, increasing production capacity.
- Trade and Specialization – Engaging in international trade allows an economy to access resources, technology, and expertise that can boost its production possibilities.
Options b, c, and d do not correctly explain an outward shift in the PPF. Changing consumer desires (b) only affects what is produced, not the total capacity. Violating economic principles (c) typically leads to inefficiency rather than growth. Lower opportunity costs (d) affect decision-making but do not necessarily expand production capacity.
Thus, the correct answer is economic growth (option a).