1.5.3—PPC shifts

An outward PPC shift represents greater productive capacity; an inward shift represents reduced capacity. The cause may be a change in resources, labour skills, technology, infrastructure or institutional conditions.

A change affecting only one good can pivot or rotate the curve, while a broad improvement or shock can shift both intercepts. The curve does not move merely because the economy chooses a different point on it.

A new irrigation technology may increase the maximum food output and pivot the PPC outward toward food; a flood that destroys factories shifts machinery capacity inward.

Moving along a curve is reallocation; shifting the curve is a change in productive potential.