Explain five ways we can move outside the current production possibilities frontier

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Expert Solution

Production possibilities frontier is a curve that shows the different combinations of two goods that can be produced by a country with the available resources and technology.

There are certain ways with which the production possibilities frontier can shift outwards:

1. Advancement in technology: If there is innovation and development of technology leading to more production of goods, it will shift the PPF outwards.

2. Increase of capital: If the capital used for production increases, then also the production of goods can increase.

3. Education or training to capital: With educating or training of human capital in the country, their efficiency will increase and lead to more production.

4. Increase of labor forces: With the increase in labor forces, the hands working for production will increase and will lead to more output of goods. This will also shift the PPF curve outwards.

5. Discovery of new resources: If there is discovery of new resources in the country, then also the output of goods of the country will increase shifting the PPF outwards.

Rahul Sunny answered 1 year ago

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