Production Possibility Curve (PPC) Boundary Determinants

Steps:

• Define PPC boundary as the maximum output combinations achievable with given resources and technology.
• Identify key shifters of PPC: increases in resources (capital, labor, land) or technology expand the boundary outward.
• Assess option A: Capital in infrastructure boosts productive capacity, directly shifting the PPC.
• Eliminate B, C, D: They relate to economic conditions or trade, not core resource endowments.

Why A is correct:

• The PPC boundary reflects an economy's resource base; capital investment in infrastructure, per economic theory, increases the stock of physical capital, enabling higher production levels.

Why the others are wrong:

• B: Inflation distorts prices and costs but does not alter the underlying resource constraints defining the PPC.
• C: Unemployed labor indicates points inside the PPC due to inefficiency, not the boundary itself.
• D: Imports/exports affect trade balances and consumption options but do not change domestic production capacity.

Final answer: A