An increase in input productivity will most likely:

• A. reduce the efficiency of resource allocation
• B. lead to higher input costs for firms
• C. shift the production possibilities frontier outward
• D. cause a decrease in total output

Answer: (C)

Verified step by step guidance

1. Understand the concept of input productivity: it refers to how efficiently inputs (like labor or capital) are used to produce output. An increase in input productivity means more output can be produced from the same amount of inputs.
2. Recall the production possibilities frontier (PPF), which shows the maximum possible output combinations of two goods or services an economy can produce given its resources and technology.
3. Analyze the effect of increased input productivity on the PPF: since more output can be produced with the same inputs, the economy's capacity to produce goods expands.
4. Recognize that this expansion shifts the PPF outward, indicating an increase in potential total output and economic growth.
5. Conclude that the other options (reducing efficiency, increasing input costs, or decreasing total output) contradict the idea of improved productivity, so the correct effect is an outward shift of the PPF.