Increases In Resource Supplies

Although resource supplies are fixed at any specific moment, they can and do change over time. For example, a nation's growing population will bring about increases in the supplies of labour and entrepreneurial ability. Also, labour quality usually improves over time. Historically, the economy's stock of capital has increased at a significant, though unsteady, rate. And although we are depleting some of our energy and mineral resources, new sources are being discovered. The development of irrigation programs, for example, adds to the supply of arable land.

The net result of these increased supplies of the factors of production is the ability to produce more of both pizzas and robots. Thus, 20 years from now, the production possibilities in Table 2-2 may supersede those shown in Table 2-1. The greater abundance of resources will result in a greater potential output of one or both products at each alternative. Society will have achieved economic growth in the form of an expanded potential output.

But such a favourable change in the production possibilities data does not guarantee that the economy will actually operate at a point on its new production possibilities curve. Some 15 million jobs will give Canada full employment now, but 10 or 20 years from now its labour force will be larger, and 15 million jobs will not be sufficient for full employment. The production possibilities curve may shift, but at the future date the economy may fail to produce at a point on that new curve.


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