Production Possibility Curve Shift Due to Productivity Changes

Steps:

• Identify the PPC as a curve showing maximum combinations of two goods (food and drink) producible with fixed resources.
• Note that an outward shift in one good and inward in another indicates uneven technological or productivity changes across sectors.
• Analyze options: Consumer choices or trade affect demand/supply but not the PPC itself; policy interventions like taxes/subsidies alter relative outputs without shifting the curve's position.
• Conclude the shift reflects resource reallocation or productivity differences, matching option C.

Why C is correct:

• PPC shifts outward for a good when productivity rises due to better technology or efficiency, per the economic definition of opportunity cost and resource productivity.

Why the others are wrong:

• A: Consumer preferences change demand, not production capacity or the PPC.
• B: Taxes and subsidies distort relative prices but do not alter the overall production frontier.
• D: Imports/exports involve trade, which expands consumption possibilities but leaves the domestic PPC unchanged.

Final answer: C