Micro Foundations · intro
What moves on the Production Possibility Frontier diagram
Sector-specific technology rotates the PPF outward on that good's axis, lowering its opportunity costopportunity costWhat you give up to get something, the value of the next-best alternative you didn't choose..
The economy sits on its frontier, fully employed.
A breakthrough raises productivity in Good X only, the frontier rotates outward along the X-axis.
More X is possible at every level of Y; the opportunity costopportunity costWhat you give up to get something, the value of the next-best alternative you didn't choose. of X has fallen.
Examiners ask this as: technology one good, sector productivity, biased growth, one industry improves.
Other scenarios on Production Possibility Frontier