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 a significant increase in productivity occurs inside most of the firms.This results in a significant increase in the output of both coconuts and fish.If all other variables remain unchanged, then the adjustment in this economy would be best represented in the production possibilities figure by a movement 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).