Use the following production possibilities frontiers to answer the next question. Curve (a) is the initial frontier for the economy, and the nation is initially producing combination P. A shift from curve (a) to curve (b) suggests that the economy can then increase its production of capital goods

A. so as to produce the combination L.
B. and consumer goods simultaneously, except at the point where the curve intersects the vertical axis.
C. but will have to hold constant its production of consumer goods.
D. only if it reduces its production of consumer goods.

ANSWER:

B. and consumer goods simultaneously, except at the point where the curve intersects the vertical axis.