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Three Factoors that can cause the ppf to shift outwards are
1. Economic growth
2. Technological progress
3. increase in physical capital or labour
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∙ 13y ago
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Why does the production possibility frontier shift outwards?
A PPF will shift out if we have improvements/increases in resources and/or technology. You would see an unbiased increase (the slop of the PPF stays the same) when R+T increase in the production of both goods. You would see a biased increase (the PPF pivots around one pt) when R+T increases in the production of only one of the goods.
Explain what shift the product possibility frontier outward and what shift is inward?
economic growth, will shift the PPF outward, because the income will increase.
Why does a production possibilities curve have a bowed-out shape?
The PPF is bowed outwards (concave to the origin) as tradeoffs between the production of any two goods are constant.
How a war in us affect the PPF?
War has two distinct effects on the PPF of a nation. Assuming the homeland of the nation at war were vulnerable to attack the entire PPF would shift inward as factories fell prey to enemy attacks - this was not the case for the US during WWII. WWII did not cause an inward shift of the PPF for the US because the mainland was not subject to attack. Production in the US was subject to the second effect of war on the production of a nation, the productive resources were shifted toward materiel for the war effort. This is not an outward shift of the PPF in any way, it is a movement along the PPF in favor of war machines at the cost of consumer goods. It is this second effect that enables countries to produce more war goods despite shrinking overall productivity than the country did in peace.To reiterate, you must remember to treat the two effects of war on a nation's PPF separately because they are distinct effects. Changes in the overall PPF are a result of acts of war (e.g. bombing factories) whereas movements along the PPF are the result of being in warfare (i.e. a given factory now produces tanks instead of cars
Why a production possibility is concave?
A production possibility curve is concave because of the law of diminishing returns. As more resources are allocated to one good over the other, the opportunity cost increases, which leads to decreasing marginal rates of substitution. This results in a concave curve that shows the trade-off between producing different goods.
What is it called when a PPF is shifted to the right?
This trend shows "The growing economy".When a PPF is shifted to the right,it means the capacity of production is increased by improvement in technology,discovery of new resources or some other factors.
Why is PPF negatively sloped?
why PPF in economics is negatively sloped
When was PPF - company - created?
PPF - company - was created in 1991.
Why is A nation's production possibilities curve is bowed out from the origin?
When there are diminishing marginal returns to factors of production, the PPF is "bowed out" from the origin.
What effect does it make if resources increase in Production Possibilty Frontier?
The effect of increased resources in a production possibility frontier, or PPF, is an imbalance in the graph. Since a PPF is created based on set production factors, the results of the graph would be skewed with an increase in resources unless other production factors were increased accordingly.
Balance of ppf account?
When you open your PPF Account you will get a pass-book which will be updated everytime you make a transaction. These days, when you open a PPF account, the balance is available online. Check with the bank that helped you open the PPF Account. They will help you with it
What is the difference straight ppf and concave ppf?
If the opportunity cost is constant, the PPF is a straight line; when the opp. cost of a good rises when it is produced more, then concave.
