Government investment in human capital is likely to shift which of the following curves in the production process?

• A. the marginal cost curve upward
• B. the supply curve for labor downward
• C. the production possibilities frontier outward
• D. the demand curve for final goods to the left

Answer: (C)

Verified step by step guidance

1. Understand the role of human capital in production: Human capital refers to the skills, knowledge, and experience possessed by workers, which enhances their productivity.
2. Recall what the production possibilities frontier (PPF) represents: The PPF shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently utilized.
3. Analyze how government investment in human capital affects production: By improving workers' skills and productivity, the economy can produce more output with the same amount of resources, effectively increasing productive capacity.
4. Determine which curve or frontier shifts due to increased productive capacity: Since the economy can now produce more, the production possibilities frontier shifts outward, indicating growth in potential output.
5. Confirm why other options are less appropriate: The marginal cost curve, supply curve for labor, and demand curve for final goods relate to costs, labor supply, and demand respectively, but human capital investment primarily affects the economy's productive capacity, not these curves directly.