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O Levels Economics (2281)•2281/12/O/N/20
Question 3 from 2281/12/O/N/20

Explanation

Outward Shift of the Production Possibility Curve

Steps:

  • Identify that positions X and Y on the PPC represent efficient production points.
  • Recognize movement from X to Y indicates an outward shift of the PPC, allowing more output of goods.
  • Understand outward shifts result from increases in resources, technology, or efficiency.
  • Link the shift to government actions promoting overall economic improvement.

Why C is correct:

  • An increase in living standards reflects broader economic growth from government policies, which expands productive capacity and shifts the PPC outward, per the definition of PPC as a frontier of maximum output.

Why the others are wrong:

  • A: Technology investment shifts PPC but is a specific input, not the most likely broad reason.
  • B: Resource discovery directly expands PPC but ignores government role in living standards.
  • D: Encouraging growth is vague and overlaps with C without specifying living standards improvement.

Final answer: C

Topic: Production possibility curve (PPC) diagrams

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