Question

$1.00 d. an increase in the price of the good e. an increase in the price of a complement 20 Quantity Figure 1 2. Which of the following could explain the shift in the production possibilities frontier from AB to AC in Figure 2? a. a productive improvement in petroleum production that has no effect on clothing production b. a productive improvement in clothing production that has no effect on petroleum production c. an increase in the size of the labor force that can produce either petroleum products or clothing d. major oil reserves in Alaska are declared off-limits to producers in order to protect the environment e. major oil reserves are discovered off the coast of Africa Clothing Petroleum B Figure 2 C

Answer 1

Answer: d. Major oil reserves in Alaska are declared off-limits to producers in order to protect the environment.

From the figure we see that when the production possibilities frontier has shifted from AB to AC, the production of clothing remains same, but the production of petroleum has decreased. From the given options, we can conclude that the reason of this shift is major oil reserves in Alaska are declared off-limits to producers in order to protect the environment.

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