Question

0 The figure given below represents the production possibilities curve for goods and services in an economy 0 Figure 2.3 0 • Curvey • Curve X • • Services • cess ) O Refer to Figure 2.3. The movement from Curve X to Curve Y indicates O a contraction in the production of services OR YOU b. expansion in the ability to produce goods. Tools O c. expansion in the ability to produce services. d. contraction in the production of goods. O $13 PM O e expansion in the ability to produce both goods and services - ( 272/2020 or Principles of

Answer 1

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.

As it can be seen in the diagram that there is outward shift of the PPF in one side only, It shows that there is expansion of ability of production of goods only because there is shift of PPF only to the side of goods.

Hence option b is the correct answer.