QUESTION 15 Assume that U.S. agricultural land is used either to raise cotton fo

Question

QUESTION 15 Assume that U.S. agricultural land is used either to raise cotton for clothing or to grow wheat. Curve FG in Figure 2-8 represents the current production possibilities frontier for cotton and wheat. What could cause the production possibilities frontier to shift from FG to FH? Bales of Cotton per Perlo0 Bushels of Wheat per Perlod O A development of a new fertilizer that improves production of wheat, but has no impact on cotton production B. development of a new fertilizer that improves production of cotton, but has no impact on wheat production O C newly reclaimed swampland that is equally suited to growing either crop newly reclaimed swampland that can be used to grow either crop, but is better suited to growing wheat

Explanation / Answer

Answer
Option A
Development of a new fertilizer improves production of wheat so in given resource the production of wheat increases and the PPF shifts outside only for wheat
Increase in production of cotton will change cotton or for both shift whole PPF outside but here the only wheat axis intersect is shifted outside so this is the improvement of only wheat production

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