Success Roar Classes

Shifting or Rotation of Production Possibility Curve

Introduction

We have already seen that Production Possibility Curve is based on certain assumptions which are as under (Shifting or Rotation of Production Possibility Curve) –

  • The resources are given and remain fixed. 
  • The technology is given and remains constant.

So when there is any change in respect of these resources and technology, it results in either shifting or rotation of PPC.

So, let’s see the impact of these changes on PPC.

Change in resources

Change in resources - Success Roar Classes
Change in resources – Success Roar Classes

Whenever there is a change in the resources, it results in shifting of PPC.

  1. When resources are increased – PPC shifts to the right indicating higher production of both the goods.
  2. When resources are decreased – PPC shifts to the left indicating less production of both the goods.

Change in Technology

Case – 1 : When there is a change in the technology of production of Chairs (means only one commodity).

Change in production technology of Chairs - Success Roar Classes
Change in production technology of Chairs – Success Roar Classes

We can see from the diagram that there is a change only on Y axis which indicates that change in the technology of production of Chairs increases its production while the production of Cricket Bats remains the same. So, this change has resulted in rotation of PPC, not the shift.

Case – 2 : When there is a change in the technology of production of Cricket Bats (means only one commodity).

Change in production technology of Cricket Bats - Success Roar Classes
Change in production technology of Cricket Bats – Success Roar Classes

We can see from the diagram that there is a change only on X axis which indicates that change in the technology of production of Cricket Bats increases its production while the production of Chairs remains the same. So, this change has resulted in rotation of PPC, not the shift.

Case – 3 : When there is a change in the technology of production of both the goods.

Change in production technology of both the goods - Success Roar Classes
Change in production technology of both the goods – Success Roar Classes

We can see from the diagram that there is a change on both the axis indicating an increase in the production of both the goods. So, this change has resulted in shifting of PPC.

So be careful while analyzing the impact of these changes on PPC.

Shifting or Rotation of Production Possibility Curve

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