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Shifters of the Production Possibilities Curve

Definition

Shifters of the production possibilities curve are factors that can cause an outward or inward shift in the PPC. These factors include changes in resource availability, technology, population size, and trade.

Analogy

Imagine you have a pizza shop with limited ingredients and ovens. If you suddenly receive a large shipment of fresh ingredients or acquire new high-tech ovens, your pizza production capabilities would increase, causing an outward shift in your pizza production possibilities curve.

Related terms

Resource Availability: Resource availability refers to the quantity and quality of resources such as land, labor, capital, and entrepreneurship available for production. Changes in resource availability can lead to shifts in the PPC.

Technological Advancements: Technological advancements refer to improvements in methods or processes used for production. When new technologies are developed or adopted, they can increase productivity and shift the PPC outward.

Comparative Advantage: Comparative advantage is when one country has a lower opportunity cost than another country in producing a particular good or service. It relates to shifts in PPC because countries can specialize based on their comparative advantages and achieve greater overall output.