Production Possibility Frontier Shifts from Resource Productivity Changes

Steps:

• Identify the PPC as showing maximum output combinations of two goods given resources and technology.
• Recognize an outward shift (to J'L') indicates increased productive capacity.
• Evaluate choices for factors expanding overall production potential.
• Select the option reducing efficiency in one sector, contracting the frontier inward.

Why A is correct:

• A fall in output per worker lowers car industry productivity, reducing total resource efficiency and shifting the PPC inward per the definition of opportunity cost and resource allocation.

Why the others are wrong:

• B: Less competition may raise prices but does not alter production capacity or shift the PPC.
• C: A larger workforce increases resources, shifting the PPC outward, not inward.
• D: Higher car prices affect demand and allocation but not the economy's production frontier.

Final answer: A