Micro Foundations · intro
What moves on the Production Possibility Frontier diagram
More resources or better technology economy-wide shift the entire PPF outward, the diagram's definition of growth.
Start on the frontier, producing more of one good means less of the other.
Investment and a growing workforce expand capacity for BOTH goods.
The whole frontier shifts outward: yesterday's impossible bundles are today's choices.
Examiners ask this as: economic growth, capital accumulation, labor force grows, frontier shifts out.
Other scenarios on Production Possibility Frontier