Question

In the given figure X₁Y₁ and X₂Y₂ are Production Possibility Curves in two different periods T₁ and T₂ respectively for Good X and Good Y. A₁ and A₂ represent actual outputs and P₁ and P₂ represent potential outputs respectively in the two time periods. The change in actual output of Goods X and Y over the two periods would be represented by movement from ______.

(Fill up the blank) 

Options

• A₂ to P₂

• A₁ to P₂

• P₁ to A₂

• A₁ to A₂

Answer 1

In the given figure X₁Y₁ and X₂Y₂ are Production Possibility Curves in two different periods T₁ and T₂ respectively for Good X and Good Y. A₁ and A₂ represent actual outputs and P₁ and P₂ represent potential outputs respectively in the two time periods. The change in actual output of Goods X and Y over the two periods would be represented by movement from A₁ to A₂.

Explanation:

Actual output changes from actual output in period T₁ to actual output in period T₂, i.e. from A₁ to A₂.