Given below is a production possibility schedule showing different quantities of two commodities – Cars and Computers which can be produced in an economy.

If an economy is operating on the Production Possibility Curve and we allocate more resources for production of computers (with fixed amount of resources available), what will it lead to?

Movement along Production Possibility Curve

If an economy is operating on the Production Possibility Curve (PPC) and more resources are allocated for the production of computers (with a fixed amount of resources available), it will lead to: Option 1: Movement along the Production Possibility Curve.

Explanation:

• When an economy is operating on the PPC, it means that it is utilizing all its resources efficiently to produce a combination of cars and computers.
• If more resources are allocated to the production of computers without increasing the total amount of resources available, it will lead to a reallocation of resources from the production of cars to the production of computers.
• This reallocation of resources will result in an increase in the production of computers and a decrease in the production of cars, while still operating on the same PPC.
• Therefore, the economy will move along the PPC, as it adjusts its production levels in response to changes in resource allocation.