Increases in the capital stock or improvements in technology

Increases in the capital stock or improvements in technology may cause O only a parallel shift inward of the Production Possibilities Frontier 0 a movement to a point inside the Production Possibilities Frontier. O only a parallel shift outward of the Production Possibilities Frontier. O a movement along the frontier but not a shift of the frontier if only one type of production is favored. O both an outward shift in the frontier and a change in the overall slope of the Production Possibilities Frontier. if the change more greatly improves one type of production than the other.

Solution

Ans:

both an outward shift in the frontier and a change in the overall slope of the production possibilities frontier, if the change more greately improves one type of production than the other.

The improvement in technology or increase in capital stock will increase the output and the production possibilities frontier shifts outward, or to the right. The slope of the production–possibility frontier (PPF) illustrates the combinations of two goods that can be produced by reallocation of resources.Hence a improvement in the production of one good will change the overall slope of the production possibilities frontier.