Things that Shift Production Possibility Frontiers - Farmland example

Things that Shift Production Possibility Frontiers

A PPF can change its shape or positioning if the society gains or loses resources or if there is a change in technology.


An Example of a Change in a PPF that Shifts the Entire Curve

A production possibilities frontier (PPF) illustrates the possible production points for an economy with a given set of resources and technology. If the economy’s resources or technology change, then the production possibilities frontier will change, too. If there is a change in the number of hours devoted to study in the example above, then the PPF will change. For example, if you have six hours of time (instead of five), then the maximum amount of economics you could read is 120 pages (if you devote all six hours to reading economics and spend no time reading history). The maximum quantity of history you could read is 300 pages (if you devote all six hours to reading history and spend no time reading economics). Since one hour can be spent reading 20 pages of economics or 50 pages of history, the opportunity costs of reading economics and history are still constant (20 pages of economics = 50 pages of history). Thus, the PPF is a straight line with the same constant slope. Similarly, if there are only 4 hours of time, then the maximum amount of economics you could read is 80 pages (if you devote all four hours to reading economics and spend no time reading history). The maximum quantity of history you could read is 200 pages (if you devote all four hours to reading history and spend no time reading economics). The graph below illustrates how a change in resources can change the production possibilities frontier for an economy.