SHIFTS & ROTATIONS IN PRODUCTION POSSIBILITY CURVE

 

 Learning Contents:                                                            

  •  Shifts  in  PPC
  •  Rotations in PPC


Change in Production Possibility Curve (Shifting/Rotation)

The change in the Production Possibility curve can be of two types:

 Shift in PPC: PPC will shift when there is a change in productive capacity (resources or technology) with respect to both the goods.

Rotation of PPC: PPC will rotate when there is a change in productive capacity (resources or technology) with respect to only one good.

Shifts in PPC:  The shift in PPC can either be rightward or backward. These shifts bring about a change in the production of both goods in an economy. The shifts in PPC are of two types:



Rightward shift in PPC: Rightward shift in PPC occurs when the resources are increased or technology is improved for the production of both goods that means we can produce more of both the goods. Accordingly, PPC shifts to the right from Initial PPC (AB) to Final PPC (CD).  Refer to Diagram 1



                                                        Diagram-1       

          Leftward shift in PPC: Leftward shift in PPC occurs when the resources are reduced for the production of both goods that means we can produce less of both the goods. Accordingly, PPC shifts Left from Initial PPC (AB) to Final PPC (CD). Refer to Diagram 2

Diagram-2        


Rotations in  PPC It happens when there is a change in productive capacity (resources or technology) with respect to only one good. The rotation can be either for the commodity on the X-axis or for commodity on the Y-axis.



Rotation for commodity on the X-axis: When there is a technological improvement or an increase in resources for the production of the commodity on the X-axis will indicate more production of good X with the same resources. PPC will rotate to the right (not shift) from AB to AC and when there is a technological degradation or fall in the resources for the production of the commodity on the X-axis will indicate less  production of good X. PPC will rotate to the left(not shift) from AB to AD (Refer to Diagram 1.1)



                             Diagram 1 .1                                                         

Rotation for commodity on the Y-axis: When there is a technological improvement or an increase in resources for the production of the commodity on the Y-axis will indicate more production of good Y with the same resources. PPC will rotate to the right (not shift) from AB to CB and when there is a technological degradation or fall in the resources for the production of the commodity on the Y-axis will indicate less  production of good Y. Accordingly, PPC will rotate to the left(not shift) from AB to DB.(Refer to Diagram 2.1)


                                                          Diagram 2.1






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