Question

What causes a country’s production possibilities set to shift outward

Answer 1

The production possibility curve shows the different combinations of goods and services produced by a country with its given resources and technology level. Therefore, a certain production possibility curve depicts a certain level of productive capacity. The curve shifts outward when the productive capacity increases for different reasons. For example, if there is an improvement in technology, a country can produce more goods and services with the given resources. So, production capacity will increase and the production possibility curve would shift outwards.