Figure: Production Possibilities and Circular-Flow Diagram

Essay

Figure: Production Possibilities and Circular-Flow Diagram
(Figure: Production Possibilities and Circular-Flow Diagram) Look at the figure Production Possibilities and Circular-Flow Diagram.Assume the two figures represent the same economy.Suppose that in the circular-flow diagram there is a significant increase in the amount of capital that flows to the firms that produce fish.Assume that there is a corresponding decrease in the amount of capital that flows to the firms that produce coconuts.This adjustment in the economy would be best represented in the production possibilities figure by a move from point A toward:
A.point A (no movement would occur).
B.point B (an increase in fish production).
C.point C (a decrease in coconut production).
D.point D (an outward shift of the entire curve).