Question

assume that an economy produces cotton t - shirts and metal stop signs. which of these would cause the production possibilities curve for this economy to shift outward? a an increase in the labor force b a decrease in the price of cotton c a decrease in the demand for t - shirts d an increase in the prices of both goods e the government mandates that all stop signs be made from metal

Explanation:

The production - possibilities curve shifts outward when there is an increase in resources or an improvement in technology. An increase in the labor force means more resources are available for production, which can lead to an outward shift of the production - possibilities curve. A decrease in the price of cotton (B) affects the cost of production but not the overall production capacity. A decrease in the demand for t - shirts (C) affects the quantity produced along the curve but not the curve itself. An increase in the prices of both goods (D) affects the market price and not the production capacity. The government mandate (E) is a regulatory change and does not directly increase the economy's production capacity.

Answer:

A. an increase in the labor force