Paper 2 · production possibility curve
The diagram shows an economy's production possibility curve. What is the effect on present and future total output of a move from Z to point X?
APresent output: lower, Future output: lower
BPresent output: lower, Future output: higher
CPresent output: unchanged, Future output: lower
DPresent output: unchanged, Future output: higher
Explanation: Moving from Z to X on the PPC (which is inside the frontier) to a point with more capital goods means present consumer goods output is unchanged (both points are on/near the curve) but channelling more resources to capital goods raises future output capacity.
ZIMSEC Economics Paper 2, June 2009, Q2
