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  • ICAR and TNAU E-Course Summarized

    Summarized Notes
  • With progress in technology, the PPC will shift

    Question: With progress in technology, the PPC will shift

    Options:

    Toward right
    Toward left
    Remains same
    None

    ✅ Explanation: A Production Possibility Curve (PPC) illustrates the maximum possible output combinations of two goods or services an economy can produce, given its existing resources and technology. Technological progress enhances the productive capacity of an economy. This means that with the same resources, the economy can now produce more of both goods or services, leading to an outward shift of the PPC to the right.

    🔑Key Points:
    A production possibilities curve (PPC) shows the maximum amount of one good that can be produced given a production level for some other good, and given the total amounts of inputs available for the production of both goods, and given the technology of production. 
    The PPC shows the limits on outputs of goods because society does not have unlimited resources. And it shows the trade-off society must bear if more of a good is to be produced.
    What creates growth?
    -When using a PPC, growth is defined as an increase in potential output over time and illustrated by an outward shift in the curve.  
    -A PPC will shift inwards when an economy has suffered a loss or exhaustion of some of its scarce resources. This reduces an economy’s productive potential.

    ✏️An outward shift of a PPC means that an economy has increased its capacity to produce all goods. This can occur when the economy undertakes some or all of the following:
    a. Employs new technology
    b. Employs a division of labour, allowing specialization
    c. Employs new production methods
    d. Increases its labour force
    e. Discovers new raw materials: Discoveries of key resources, such as oil, increase an economy’s capacity to produce.

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