Respuesta :
The correct option is A.
Because the expansion of the production possibilities curve occurs when
the allocation of resources or also increases in the
the productivity of these resources, which results in the
economic growth.
It is also possible that the curve moves towards the left, which would be
possible before a strong natural disaster, a war or any situation that
reduces the capacity of production of the economy and its productivity
The production possibilities curve for this economy will shift outward when there will be an increase in the labor force as the labors are the inputs in the production of cotton t-shirts and metal stop signs.
Further explanation:
A production possibilities curve for an economy represents the maximum output of two goods that the economy can produce. The position of the production possibilities curve is based on the given resources and technology. An economy that produces cotton t-shirts and metal stop signs will face an outward shift in its production possibilities curve when its labor force rises. This is because labors are inputs in the production of these goods. The maximum productive ability of an economy is not influenced by the prices and demand for goods and thus, prices and demand for goods cannot shift the production possibilities curve.
Justification for the correct and incorrect answer:
A) an increase in the labor force: This option is correct.
The labors are inputs used in the production of cotton t-shirt and metal stop signs in the economy. An increase in the labor force in the economy will raise the inputs and thus, the maximum production of both goods that the economy can undertake rises. As a result, the production possibilities curve of the economy will shift outward.
B) a decrease in the price of cotton: This option is incorrect.
A decrease in the price of cotton will raise its demand in the economy and will not increase the productive ability of the economy. The changes in input resources and technique of production change the maximum output of both goods than economy could produce.
C) a decrease in the demand for t-shirts: This option is incorrect.
The position of the production possibilities curve is based on the available input resources and the technique of production. A decrease in the demand for t-shirts cannot change the position of the production possibilities curve as it does not changes the maximum quantity of goods that an economy could produce.
D) an increase in the prices of both goods: This option is incorrect.
The position of the production possibilities curve of an economy is not influenced by the changes in prices of both goods that the economy produces. The production possibilities curve of an economy shifts outwards only when the inputs increase in quantity or the technique of production gets updated. Thus, an increase in the prices of both goods will not shift the production possibilities curve of the economy outward.
Therefore, an increase in the labor force will shift the production possibilities curve for the economy outward.
Learn more:
1. Learn more about the production possibility curve
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2. Learn more about goods production
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3. Learn more about inflation and economy
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Answer details:
Grade: Senior School
Subject: Economics
Chapter: Introduction to Micro Economics
Keywords: an economy produces, cotton t-shirts, and metal stop signs, production possibilities curve, for this economy, shift outward, an increase, labor force, decrease in cotton prices, decrease in demand, for t-shirts, an increase, in the prices, of both goods, inputs for production, available resources, given technology.
