Interpreting movement on the production possibility curve

Steps:

• Locate points X and Y on the PPC diagram, where X produces fewer consumer goods and more capital goods.
• Observe that Y shows higher consumer goods output without sacrificing capital goods, indicating an outward shift in the curve.
• Recognize this biased outward shift reflects sector-specific efficiency gains.
• Match to option C, as it describes productivity improvement in consumer goods.

Why C is correct:

• Per economic definition, an increase in productivity in one sector (e.g., via technology) causes a biased outward shift in the PPC, allowing more output of that good without reducing the other.

Why the others are wrong:

• A: Demand changes affect quantity supplied but not the PPC's position or feasible production points.
• B: Rising opportunity cost occurs with movement along the curve due to resource reallocation, not a shift.
• D: An inward PPC shift indicates reduced resources or productivity, opposite of the observed increase.

Final answer: C