Posted by
Anjali Kaur
on
Jun 15, 2021
Rotation in Production Possibility Curve
Production Possibility Curve is a curve that shows various production possibilities of two goods given the resources and technology. PPC curve shifts when there is the growth of resources or improvement in technology, assuming in the favor of both the goods. But, what if there is improvement in technology in favor of 1 good only? Let’s understand the rotation in the production possibility curve.
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What causes rotation in PPC?
- Growth of resources in the favor of any 1 good or product.
- Improvement in technology in the favor of any 1 good or product.
Growth of Resources in the favor of Good X
When the resources grow in the favor of 1 good(let it be good x) only, then the PPC rotates only on the X-axis. Let’s assume given PPC is AB, as the resources grow in the favor of good X, then PPC rotates outwards on the X-axis, as shown below.
Growth of Resources in the favor of Good Y
When the resources grow in the favor of 1 good(let it be good Y) only, then the PPC rotates only on the Y-axis. Let’s assume given PPC is AB, as the resources grow in the favor of good X, then PPC rotates outwards on the Y-axis, as shown below.
Decrease in Resources against Good X
When the resources decrease against 1 good(let it be good X) only, then the PPC rotates inwards only on the X-axis. Let’s assume given PPC is AB, as the resources decrease against good X, then PPC rotates inwards on the X-axis, as shown below.
Decrease in Resources against Good Y
When the resources decrease against 1 good(let it be good Y) only, then the PPC rotates inwards only on the Y-axis. Let’s assume given PPC is AB, as the resources decrease against good Y, then PPC rotates inwards on the Y-axis, as shown below.
Improvement in Technology in the favor of Good X
When the technology improves in the favor of 1 good(let it be good x) only, then the PPC rotates only on the X-axis. Let’s assume given PPC is AB, as the technology improves in the favor of good X, then PPC rotates outwards on the X-axis, as shown below.
Improvement in Technology in the favor of Good Y
When the technology improves in the favor of 1 good(let it be good Y) only, then the PPC rotates only on the Y-axis. Let’s assume given PPC is AB, as the technology improves in the favor of good Y, then PPC rotates outwards on the Y-axis, as shown below.
Degradation in Technology against Good X
When the technology degrades against 1 good(let it be good x) only, then the PPC rotates on the X-axis. Let’s assume given PPC is AB, as the technology degrades against good X, then PPC rotates inwards on the X-axis, as shown below.
Degradation in Technology against Good Y
When the technology degrades against 1 good(let it be good Y) only, then the PPC rotates inwards on the Y-axis. Let’s assume given PPC is AB, as the technology degrades against good Y, then PPC rotates inwards on the Y-axis, as shown below.
Thank You!
You can read more related posts:
- Introduction to Economics
- What do you mean by an economy?
- What are the Central problems of the economy?
- Production Possibility Curve
- What causes PPC to shift?
- What does the opportunity cost mean?
- The point on and off the Production Possibility Curve
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