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Economics · Oct / Nov 2018 · Paper 12 · Question 3

2281Production possibility curve (PPC) diagrams

The diagram shows a country's production possibility curve (PPC). Which statement is correct?

  1. AA movement from X to Y shows a decrease in efficiency in the economy.
  2. BA movement from X to Z shows a discovery of new resources in the economy.
  3. CA movement from Y to Z shows resources are being diverted from capital goods to consumer goods.
  4. DA movement from Z to Y shows an increase in efficiency in the economy.

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Correct answer: C. A movement from Y to Z shows resources are being diverted from capital goods to consumer goods.

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