Micro-Econ Ch.2 PPF Shapes, Shifts, and Rotations

Cause of a Bowed-Out PPF Shape

Increasing opportunity costs caused by resources being specialized and not equally adaptable for producing both goods.

Cause of a Linear (Straight-Line) PPF Shape

Constant opportunity costs caused by resources being equally adaptable to producing either good.

Shift Effect: Equal Labor Force Increase in Both Sectors

Shifts the entire PPF curve outward/rightward, allowing increased maximum output for both goods.

Shift Effect: Technology Improvement in Only ONE Sector (Computers)

Rotates/pivots the PPF outward along the computer axis while leaving maximum car output unchanged.

Shift Effect: Input Shortage in Only ONE Sector (Rubber shortage for Cars)

Rotates/pivots the PPF inward toward the origin along the car axis while leaving maximum computer output unchanged.

Economic Growth Definition on a PPF

Represented visually by an outward (rightward) shift of the frontier driven by expanded resources, higher productivity, or tech advances.