E C A G 0 H B D F Consumer Goods Refer to the diagram. Technological advance that improves the ability to produce capital goods but not consumer goods is shown by the shift of the production possibilities curve from AB to
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This would result in an outward shift of the production possibilities curve. Show more…
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a. Draw a production possibilities curve for a hypothetical economy producing capital and consumer goods. b. Suppose a major technical breakthrough occurs in the capital goods industry and the new technology is widely adopted only in this industry. Draw the new production possibilities curve on the same set of axes as a. c. Now assume that a technological advance occurs in consumer goods production, but not in capital goods production. Draw the new production possibilities curve on the same set of axes as a and b.
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