• Unemployment and the failure to achieve productive efficiency cause an economy to operate at a point inside its production possibilities curve.
• Increases in resource supplies, improvements in resources quality, and technological advance cause economic growth, which is depicted as an outward shift of the production possibilities curve.
• Society's present choice of capital and consumer goods helps determine the future location of its production possibilities curve.
• International specialization and trade enable a nation to obtain more goods than its production possibilities curve indicates.
Examples and Applications
There are many possible applications and examples relating to the production possibilities model. We will discuss just a few of them.
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