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Shift in PPC

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Shift in PPC

PPC shifts because of the growth of the availability of inputs such as physical capital or labor or technological progress, etc. Such a shift in PPC reflects changes in the economy. It can be expressed by the following function:

Q=ƒ(𝑘l, 𝑘k)


Here, scale factor (𝑘) is taken as a resemblance of change of technology which results to shift in PPC. Shift in PPC may be outward or inward (Upward or Downward). If 𝑘 is positive, then PPC will shift outward or else inward. Sometimes, the changes may occur only in one industry out of the two which leads to the shift in PPC upward or rightward only of one industry. It can be shown by the help of following diagrams:
Shift in PPC

Shift in PPC
In the first diagram we can see the shift in PPC occurs due to the changes in inputs and technology in both the industry or goods. In the second diagram we can see the shift in PPC which occur due to the improvement of inputs or technology only in food industry.

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