Micro Foundations · intermediate
What moves on the Absolute vs. Comparative Advantage diagram
Human capital investment raises productivity and expands the home production possibility frontier outward, increasing attainable output of both goods.
The frontier is fixed by resources and technology, so improving either moves it.
A decade of investment in schooling and vocational training raises worker productivity.
The home frontier pushes outward: more of both goods is now attainable.
Growth in this model is literally the frontier moving. Everything inside it is just a choice about how to use what you already have.
Examiners ask this as: education, skills, human capital, ppf expands, productivity rises.
Other scenarios on Absolute vs. Comparative Advantage