Shifting the PPF or PPC
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The document discusses the production possibilities frontier (PPF) and its key assumptions of only producing two goods, full employment of resources, and fixed resources and technology. It notes that the PPF can shift due to changes in resource quantity/quality, technology, or trade. Specific examples provided include an increased population shifting the PPF inward, a technology improvement in pizza ovens shifting the PPF outward, and how trade between Mexico and Panama could shift their respective PPFs.
Shifting the PPF or PPC
- 2. 4 Key Assumptions Revisited Only two goods can be produced Full employment of resources Fixed Resources (4 Factors) Fixed Technology What if there is a change? 3 Shifters of the PPC 1. Change in resource quantity or quality 2. Change in Technology 3. Change in Trade 2 Production Possibilities
- 3. Robots Pizzas What happens if there is an increase in population? 3 Production Possibilities
- 4. Robots Pizzas What happens if there is an increase in population? 4 Production Possibilities
- 5. Robots Pizzas What if there is a technology improvement in pizza ovens 5 Production Possibilities
- 6. Robots Pizzas What if there is a technology improvement in pizza ovens 6 Production Possibilities
- 7. Panama Favors Consumer Goods Mexico Favors Capital Goods Consumer goods CapitalGoods Current PPC Future PPC Consumer goods CapitalGoods Future PPC Current PPC Capital Goods and Future Growth MexicoPanama 7 Countries that produce more capital goods will have more growth in the future.