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Introductory Economic Models

PPF - Outward Shifts

Introductory Economic Models

PPF - Outward Shifts

Changes in the amount of resources or technology will affect our PPF. Hold on tight! We're expanding (our knowledge)!

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concept

Technological Advances in an Industry

2m

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Alright. So up to this point, our PPS haven't moved now. We're gonna see what happens when there's maybe a change in the amount of resources or technology available in the society. So the idea here is that over time societies generally become more productive, right? So you could imagine uh you know where we are now with our technology compared to 100 years ago. You would expect that we could probably produce more now than we could before. Alright, So we're gonna talk about two types of outward shifts in this video um outward shifts of the PPF. So the idea is we're not gonna really do any math here, but just kind of visualize what happens when let's say in this first example, we have a technological advance in a particular industry. So when it's in a particular industry, only one side of it's gonna move. So I'm gonna write up here um one side, right? One side moves. Um And we might have something like this where our original PPF might have looked something like this. Let's say there was an increase. Let's say this is pizza down here and robots. Um Let's say there was an advance in the creation of pizza, right? We found like some new oven that can make pizzas faster, but that's not really gonna affect our production of robots, right? We didn't get any better at producing robots. We only got better at producing pizzas. So what we might see is something like this happen on the graph. You can use green to signify our new PPF. So, you know, let's say new pizza oven over here on on the right. Um And what's gonna happen is notice that our maximum amount of robots stay the same, but now we can create more pizzas, right? So our cap on our robots still at that same level, right? Um But now our maximum pizza creation is further to the right, but this also allows us to create more um robots too. Right? So let's say for the sake of example, we were producing um at this point right here, right? We like that amount of pizzas. We were reaching the right mix of stuff for the consumers in the economy at this point. But now we've got this extra pizza technology and let say we're not even going to make more pizzas. We're happy with that amount of pizzas. Look, this extra technology made it so we can actually create this much more robots. And that's because we're making the pizzas more efficiently. We can take some of those resources that were previously put into pizza and now we can put it to robots and actually get more robots out of it. Cool. So only one side of the PPF is moving in this example, let's move on to the next one

2

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General Economic Growth

1m

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Alright, so let's compare that to a general increase in the availability of resources or technology, something like that. So before we had an industry specific growth, like pizza ovens got better. Right? So the pizza production got better. This is just a general increase. So maybe, you know, there's been a lot of immigration are population has grown, so there's more labor available, more resources or I don't know, we go to Iraq and win a war and now we have all their oil. So our productivity goes up anything like that. I don't know, a new computer that helps every industry. So let's kind of look at this on the graph. Um So where the other one was one side moving here, We're gonna have both sides moving out. Okay, so let's see um an example, let's pretend this was our original PPF, something like that. Right? And now we've had this general increase in our economy and in green, I'm gonna draw our new one. So what you're gonna see is that both um both goods have seen production increase. Let me draw that a little better. Uh a little better. Right, So everything's gone up. You see both of the sides have shifted out now. Um So there's a shift out shift out, right? And both of the sides here and here are further up, so we can increase our production on both sides. It's just a general increase. And in these videos, right? We've been shifting stuff outward. It's very rare that you would ever shift anything inward. I've barely ever seen it, but like, you know, maybe if I don't know, imedi hits the Earth and like all our resources are gone or I don't know, it has to be some kind of crazy apocalyptic catastrophe like that, and you'll see the curves shift inward, but generally right, we get more productive and we're going to shift outward. Like we've seen in these examples. Cool, Let's let's move on to the next video.

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Problem

Problem

The country of Clutchtopia has just stumbled upon a new technology as shown on the graph.
If Clutchtopians demand 3 million pizza bagels, what is the productively efficient increase in robot production?

A

0

B

1 thousand

C

2 thousand

D

4 thousand

4

Problem

Problem

The country of Clutchtopia has just stumbled upon a new technology as shown on the graph.
What type of PPF shift did Clutchtopia experience?

A

Technological advance in the production of robots

B

Technological advance in the production of pizza bagels

C

General increase in the productivity of technology

D

Decrease in pizza bagel production efficiency

5

Problem

Problem

The country of Clutchtopia has just stumbled upon a new technology as shown on the graph.
What is the maximum amount of robots that can be produced in Clutchtopia after the shift?

A

0

B

2 thousand

C

4 thousand

D

6 thousand