Which of the following best describes the effect of advances in production technology on a country's Production Possibilities Frontier (PPF)?

• A. The PPF shifts inward, showing a decrease in available resources.
• B. The PPF becomes a straight line, representing constant opportunity costs.
• C. The PPF remains unchanged, as technology does not affect production possibilities.
• D. The PPF shifts outward, indicating an increase in productive capacity.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand what a Production Possibilities Frontier (PPF) represents. The PPF shows the maximum possible output combinations of two goods that an economy can produce given its resources and technology.
2. Step 2: Recognize that advances in production technology improve the efficiency of producing goods, allowing more output from the same amount of resources.
3. Step 3: Analyze how improved technology affects the PPF. Since more output can be produced, the PPF shifts outward, representing an increase in the economy's productive capacity.
4. Step 4: Contrast this with other options: an inward shift would indicate fewer resources, a straight line PPF implies constant opportunity costs (not necessarily related to technology), and no change would mean technology has no effect, which is incorrect.
5. Step 5: Conclude that the best description is that advances in production technology cause the PPF to shift outward, reflecting greater production possibilities.