A PPF Change that only Shifts One Intercept

INSERT DIAGRAM HERE

An Example of a Change in a PPF that only Shifts One Intercept

Suppose the vertical axis measures the quantity of agricultural products (i.e., food) produced by a society, while the horizontal axis measures the quantity of industrial products (i.e., machines) produced. Suppose there is a technological innovation that affects the production of agricultural products but does not affect the production of industrial products. An example of this might be genetic engineering that provides farmers with seeds which produce more output. With the same number of seeds, the same amount of farmland, the same amount of agricultural machinery and the same number of farmers, farmers are now able to produce more food products than they could before the technological innovation.

This technological change would shift the maximum amount of agricultural output that could be produced to a higher point on the vertical axis. Since the technological change did not affect the production of industrial products, the maximum amount of industrial output that could be produced would remain unchanged. Consequently, the new PPF after the technological change would have the same horizontal intercept, but a new, higher vertical intercept. Note that the new PPF has a steeper slope than the previous one. This tells us that the opportunity cost of industrial products has increased, while the opportunity cost of agricultural products has decreased.