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JAMB Economics 1989 Question 3

Question 3

Basic Concepts

A shift in the production possibility frontier could result from

  1. A.unemployment
  2. B.changes in the combination of goods produced
  3. C.inflation
  4. D.changes in production techniques.
Show the answer and explanation

Answer: D (changes in production techniques.)

Explanation

Better techniques let the economy produce more of both goods, so the whole frontier shifts outward. Unemployment puts the economy inside the frontier.