Shifting the Production Possibilities Curve – Macro Topic 1.2 (Micro Topic 1.3)

which of the following do economists consider to be capital? This is a topic that many people are looking for. star-trek-voyager.net is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, star-trek-voyager.net would like to introduce to you Shifting the Production Possibilities Curve – Macro Topic 1.2 (Micro Topic 1.3). Following along are instructions in the video below:

“Heidi econ students. This is mr clifford welcome to ac dc econ right now we we re gonna talk about how the production possibilities curve ships for you to get to the idea of things shifting in the econ were explained concepts and then we put those concepts to numbers those numbers on a graph and then usually we shift the graph you re gonna see it in micro and macroeconomics and it all starts with the production possibilities curve. We ve established that any point inside the curve is inefficient. Because we could produce more of each good and any point on the curve is eficient outside the curve is impossible or not attainable given our current resources.

But what if we get more resources. That s right the production possibilities. Curve can shift you must use that there s two things that shift the production possibilities curve. A change in the quantity or quality of resources or a change in technology for example in 1920.

There s a certain number of cars and corn that we could produce. But now we can produce way more than we did before that point right there that was once impossible is now possible..


This is because we have new and better resources and because we have better technology. There s one more option that can shift occurs. Which is the idea of trade knowing countries specialize in trade they can get other products at a lower opportunity cost that they produce to themselves that means the production possibilities curve would shift out in the amount that they can consume it doesn t mean that they can produce more than they could before but they can get more than them before because of trade now you learn a whole lot more about this and you re gonna learn about something called comparative advantage make sure to watch this video. It s gonna help you out now let s get back to shifting the production possibilities curve.

I m gonna give you four examples and i want you to figure out what happens to the production possibilities curve for consumer goods and capital goods. Now a quick reminder consumer goods are made for direct consumption like pizza capital goods are made for indirect consumption so it s like an oven so capital goods are our tools and machinery to produce consumer goods for each one of these scenarios. Draw separate production. Possibilities.

Curve and show it happens. In each one of the situation s number..


One. What if we have faster computers and better technology for number two. What if a country s power plants were destroyed. And so it had a decrease in electricity to produce number three.

What if there was an increase in the number of people who are unemployed and there was in the economy and number four what if there s an increase in education made sure to pause this video and i ll go over the answers for number one. If we have new computers and better technology the entire production possibilities curve will shift outward we can produce more consumer goods and more capital goods for number two a destruction of power plants would mean we have less resources in this case electricity. Which is super important for an economy and that would cause a production possibilities curve to shift inward. We produce less consumer goods and we can produce less capital goods and that s exactly what happened to japan when there was the earthquake and the tsunami.

Combination right here. Which was efficient became impossible because the resources were destroyed..


Now let s compare that to number three. When we have a recession and a bunch of unemployed workers that would not be a shift in the curve right the curve does not shift inward. Because the workers are still a lot now if the workers died that would mean we don t have a resource. The entire curve would shift inward.

But the workers are alive they re just not being used that means. It s a point inside the curve remember a point in the curve is inefficient or it s unemployment of our resources. So workers who are unemployed is a point in the curve not a shift in the curve. Okay and for number four the last one an improvement in education would result in a shift outward of the curve remember.

This is not more workers. It s better workers..


The quality of workers increased. This is the idea of human capital. If our workers are better trained. And more intelligent that would cause us to be able to produce more stuff to help you understand this concept go ahead and watch the third episode of my series econ movies.

I use the movie monsters ink to explain the production. ” ..

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