Question

Which does not shift a macro production possibilities frontier?

A) increased unemployment

B) increased the labour force participation rate

C) increased entrepreneurship.

D) increased the quantity of land contributing to production.

E) increased education

Answer 1

Answer : increased entrepreneurship

Entrepreneur is a factor of production which combines all other factors of production in the production process. PPC assumes all resources are constant. Thus an increase in entrepreneure does not leads to increase in production why because, as resources are constant output remains constant, thus PPF does not shift

production possibility frontier (PPF)shows the different production possibilities of two goods that a country can produce using given resources, technology and efficiency. production possibility prontier shows maximum production possibilities of two goods of a country. An increase technology, productive resources, efficiency, etc leads to rightward shift in production possibilities. It shows now country can produce more quantities of two goods. On the contrary a depriviation in technology, productive resources, effiency etc leads to lefftward shift in PPF. It shows now country can produce less quantity of two goods.

Wrong options:

increased unemployment

when unemployment increases, there experience less human resources to produce output. As a result output falls and PPF shift inwards

increased the labour force participation rate

increased the labour force participation rate: increase in the labour force participation leads to an increase in human productive resources, which cause PPF to shift right ward.

increased the quantity of land contributing to production.

Increased productive land enable to increase output, as a result PPF shift rightwards

E) increased education

Education increases the efficiency of labour, there output increases and PPF shift outwards