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How can the PPF be moved in one direction or another?  

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studentdivers... | Student | Honors

Posted January 16, 2011 at 5:35 PM via web

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How can the PPF be moved in one direction or another?

 

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted January 16, 2011 at 10:56 PM (Answer #1)

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A production possibility frontier (or production possibility curve) is a measure of a country's economic potential.  So what this question is really asking is "how can a country's economic potential increase or decrease?"

As you can see if you look at the economic growth link below, there are many ways that economic growth (moving the PPF to the right) can be achieved.  But basically, they boil down to the following things:

  • A country can move its PPF by acquiring more resources.  If the country's population grows or if its people become better educated, it has more human resources.  If it discovers new deposits of some important mineral, it has more resources.
  • A country can use its resources more efficiently.  This often happens through technological change.  When a country becomes industrialized, for example, the machines help it to get more out of each person's labor.

Follow the links below (especially the economic growth one) for more information.

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