Figure 5 shows the production possibility curve for an economy producing boots and bicycles. The initial combination of boots and bicycles produced is shown by point E.
A change in consumer preferences causes the boot industry to contract and the bicycle industry to expand.
If labour is not fully mobile between the two industries, then the new combination of boots and bicycles produced is most likely to be at
1 )
point F.
2 )
point G.
point H.
4 )
point I.
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