Economics Production Possibility Frontier Questions Medium
A positive shift of the Production Possibility Frontier (PPF) refers to an outward shift or expansion of the PPF curve. This occurs when there is an increase in the economy's overall production capacity, resulting in the ability to produce more goods and services. It can be caused by factors such as technological advancements, increased investment in capital goods, improvements in infrastructure, or an expansion of the labor force. A positive shift of the PPF indicates economic growth and an improvement in the economy's productive efficiency.
On the other hand, a negative shift of the PPF refers to an inward shift or contraction of the PPF curve. This occurs when there is a decrease in the economy's overall production capacity, resulting in the ability to produce fewer goods and services. It can be caused by factors such as natural disasters, wars, economic recessions, or a decline in the availability of resources. A negative shift of the PPF indicates a decrease in economic output and a decline in the economy's productive efficiency.
In summary, a positive shift of the PPF represents economic growth and an increase in production capacity, while a negative shift represents a decrease in production capacity and a decline in economic output.