EconMovies Episode #3: Monsters Inc. oduction Pos sibilities and Res sources Part 3 - Check Your Understanding- Answer the following questions. 13. Explain why a country cannot produce a combination of products that is outside of its production possibilities curve. 14. What can cause a production possibilities curve to move (shift)outward to the right?Explain. 15. Why does an increase in the production of capital goods lead to an increase in production of consumer goods in an economy? Explain.

## Step1<br />The production possibilities curve (PPC) represents the maximum possible combinations of two goods that a country can produce using its available resources efficiently. If a country cannot produce a combination of products that is outside of its PPC, it is because it does not have enough resources or technology to produce those combinations. The PPC is based on the assumption of fixed resources and technology. Therefore, any point outside the curve is unattainable with the current resources and technology.<br /><br />## Step2<br />The production possibilities curve can move (shift) outward to the right due to several reasons. One primary reason is technological advancements. When a country adopts new technologies, it can produce more of both goods with the same amount of resources. Another reason is an increase in resources. If a country gains access to more resources, such as labor or capital, it can produce more goods. Additionally, improvements in education and training can lead to increased productivity, causing the PPC to shift outward.<br /><br />## Step3<br />Capital goods are goods used in the production of other goods and services. They include machinery, equipment, and factories. When there is an increase in the production of capital goods, it means that more machinery and equipment are available to produce consumer goods. This leads to an increase in the production of consumer goods because the production process becomes more efficient. With more capital goods, more consumer goods can be produced in the same amount of time. Therefore, an increase in the production of capital goods leads to an increase in the production of consumer goods in an economy.