Question

Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves. If Beta devotes more resources to produce capital goods than consumer goods as compared to Alpha, then in the future 10 2 Consumer Goods Alpha will not be able to achieve full employment or productive efficiency Beta will not be able to achieve full employment or productive efficiency Beta will experience greater economic growth than Alpha

Answer 1

Since the production possibility can be defined as a line which is summation of different combinations of two different goods which can be produced with the available resources by using it efficiently. If the technology improves or resources increase, then the PPF shifts outwards.

Since both Alpha and beta have identical production possibility frontier curve and Beta devotes more resources for the production of the capital goods relative to consumers goods compare to Alpha.

So it means in the Beta economy, the production of capital goods will be more and consumers goods are produced with the capital goods. so there will be more production of consumers goods in the economy Beta in the future because this economy capital goods will be more compare to Alpha economy.

Hence there will be more economic growth in the Beta economy compare to the Alpha's economy in the future.

Hence option d is the correct answer.