> #economics , #production-possibilities-curve > Distinguish between movement along and shift of the curve in production possibilities curve?
Anonymous
Nov 12, 2023

Distinguish between movement along and shift of the curve in production possibilities curve?

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Nov 12, 2023
Movement along the production possibilities curve refers to a change in the quantity of one good that is produced, while holding the quantity of the other good constant. This occurs when resources are reallocated between the production of the two goods. For example, if an economy is initially producing 10 units of good A and 20 units of good B, and then decides to produce 15 units of good A and 15 units of good B, this would represent a movement along the curve.

On the other hand, a shift of the production possibilities curve refers to a change in the maximum potential output of both goods. This occurs when there is a change in the quantity or quality of resources, technology, or other factors of production. For example, if there is an increase in the availability of capital or an improvement in technology, the production possibilities curve will shift outward, indicating that more of both goods can be produced.

In summary, movement along the production possibilities curve represents a change in the quantity of one good produced, while a shift of the curve represents a change in the maximum potential output of both goods.
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