Alright. So up until this point, our haven't moved. Now we're going to see what happens when there's maybe a change in the amount of resources or technology available in society. The idea here is that over time societies generally become more productive, right? You could imagine, where we are now with our technology compared to 100 years ago; you would expect that we could probably produce more now than we could before. Alright? So we're going to talk about 2 types of outward shifts in this video. The idea is, we're not going to really do any math here but just kind of visualize, what happens when, let's say, in this first example, we have a technological advance in a particular industry. When it's in a particular industry, only one side is going to move. I'm going to write up here, one side. Right? One side moves, and we might have something like this. Where our original might have looked something like this. Let's say there was an increase. Let's say this is pizza down here and robots. Let's say there was an advance in the creation of pizza, right? We found a new oven that can make pizzas faster, but that's not really going to affect our production of robots. Right? We didn't get any better at producing robots; we only got better at producing pizzas. So what we might see is something like this happen on the graph. Let me use green to signify our new. So, you know, let's say the new pizza oven over here on the right, and what's going to happen is notice that our maximum number of robots stays the same, but now we can create more pizzas, right? So our cap on our robots is still at that same level, right, but now our maximum pizza creation is further to the right. But this also allows us to create more robots too, right? So let's say for the sake of example, we were producing at this point right here right, we liked that amount of pizzas; we were reaching the right mix of stuff for the consumers in the economy at this point, but now we've got this extra pizza technology and let's say we're not even going to make more pizzas; we're happy with that amount of pizzas. Look, this extra technology made it so we can actually create this much more robots and that's because we're making the pizzas more efficiently. We can take some of those resources that were previously put into pizza, and now we can put it to robots and actually get more robots out of it. Cool. So, only one side of the is moving in this example. Let's move on to the next one.
PPF - Outward Shifts - Online Tutor, Practice Problems & Exam Prep
Created using AISocieties generally experience productivity increases over time due to advancements in technology or resource availability. A specific technological improvement, like a new pizza oven, can enhance production in one industry while leaving others unchanged. Conversely, a general increase in resources, such as labor or capital, shifts production possibilities outward for all goods. This reflects the economy's ability to produce more efficiently, leading to greater output across various sectors. Understanding these shifts is crucial for grasping concepts like aggregate supply and demand, which influence overall economic performance.
PPF - Technological Advances in an Industry
Video transcript
PPF - General Economic Growth
Video transcript
Alright. So let's compare that to a general increase in the availability of resources or technology, something like that. So before we had an industry-specific growth, like pizza ovens got better, right? So the pizza production got better. This is just a general increase, so maybe you know there's been a lot of immigration, our population has grown so there's more labor available, more resources, or I don't know, we go to Iraq and win a war and now we have all their oil so our productivity goes up. Anything like that. A new computer that helps every industry. So let's kind of look at this on the graph. So where the other one was one side moving, here we're going to have both sides moving out. Okay. So let's see, an example. Let's pretend this was our original something like that, right, and now we've had this general increase in our economy, and in green, I'm going to draw our new one. So what you're going to see is that both, both goods have seen the production increase let me draw that a little better. A little better. Right? So everything's gone up. You see both of the sides have shifted out now. So there's a shift out, shift out, right? And both of the sides here and here are further up. So we can increase our production on both sides, it's just a general increase. And in these videos right, we've been shifting stuff outward. Outward. It's very rare that you would ever shift anything inward. I've barely ever seen it, but like, you know, maybe if, I don't know, a meteor hits the earth and like all our resources are gone or I don't know, it'd have to be some kind of crazy apocalyptic catastrophe like that and you'll see the curves shift inward, but generally, right, we get more productive and we're going to shift outward like we've seen in these examples. Cool. Let's move on to the next.
The country of Clutchtopia has just stumbled upon a new technology as shown on the graph. If Clutchtopians demand 3 million pizza bagels, what is the productively efficient increase in robot production?
The country of Clutchtopia has just stumbled upon a new technology as shown on the graph. What type of PPF shift did Clutchtopia experience?
The country of Clutchtopia has just stumbled upon a new technology as shown on the graph. What is the maximum amount of robots that can be produced in Clutchtopia after the shift?
Here’s what students ask on this topic:
What causes an outward shift in the Production Possibility Frontier (PPF)?
An outward shift in the Production Possibility Frontier (PPF) is caused by an increase in the availability of resources or advancements in technology. This can happen in two ways: specific technological improvements in a particular industry or a general increase in resources like labor or capital. For example, a new pizza oven that makes pizzas faster would shift the PPF outward for pizza production but not for other goods. Conversely, a general increase, such as more labor due to immigration or new technology that benefits all industries, would shift the entire PPF outward, indicating that the economy can produce more of all goods.
Created using AIHow does a technological advancement in one industry affect the PPF?
A technological advancement in one industry causes an outward shift in the PPF for that specific industry while leaving other industries unchanged. For instance, if a new pizza oven is invented that makes pizzas faster, the maximum production of pizzas increases, shifting the PPF outward for pizzas. However, the production capacity for other goods, like robots, remains the same. This allows the economy to produce more pizzas without sacrificing the production of other goods, and potentially reallocating resources to increase the production of other goods as well.
Created using AIWhat is the difference between a specific and a general increase in resources on the PPF?
A specific increase in resources or technology affects only one industry, causing an outward shift in the PPF for that particular good. For example, a new technology that improves pizza production will only shift the PPF outward for pizzas. In contrast, a general increase in resources, such as an increase in labor or a technological advancement that benefits all industries, shifts the entire PPF outward. This means the economy can produce more of all goods, reflecting an overall increase in productivity and resource availability.
Created using AICan the PPF ever shift inward? If so, under what circumstances?
While it is rare, the PPF can shift inward under extreme circumstances that reduce the economy's productive capacity. Such scenarios might include natural disasters, wars, or other catastrophic events that destroy resources or significantly reduce the labor force. For example, if a meteor were to hit the Earth and destroy a large portion of resources, the PPF would shift inward, indicating that the economy can produce less of all goods. Generally, however, economies tend to experience outward shifts due to improvements in technology and increases in resources.
Created using AIHow do outward shifts in the PPF relate to aggregate supply and demand?
Outward shifts in the PPF indicate an increase in the economy's productive capacity, which can lead to an increase in aggregate supply. As the economy can produce more goods and services, the aggregate supply curve shifts to the right. This increase in supply can lead to lower prices and higher output, assuming demand remains constant. Understanding these shifts helps in analyzing overall economic performance, as changes in aggregate supply and demand influence key economic indicators like GDP, inflation, and employment levels.
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