Micro Foundations · intro
What moves on the Absolute vs. Comparative Advantage diagram
Better technology raises what Home can produce with the same resources, pushing its entire PPF outward and changing relative opportunity costs.
Two producers, two frontiers: each line shows the combinations of wine and cloth one side can make.
Home adopts new manufacturing technology, so every worker now produces more.
Home's whole frontier pushes outward: more of both goods is possible.
Opportunity costs have changed too, so the pattern of specialization and the gains from trade shift with them.
Examiners ask this as: technology leap, automation, manufacturing boom, productivity gain home, industrial upgrade.
Other scenarios on Absolute vs. Comparative Advantage