Question

Draw a production possibility curve and indicate growth of resources.

Answer 1

In the given figure, $P_1{P}_1$ the production possibility curve represents the different combinations between two goods which can be produced in an economy given the resources and technology. However, if there is any growth of resources in the economy it leads to an outward shift in the production possibility curve in the economy. This growth in the resources/technology leads to a shift in the PPC, as given by $P_2{P}_2$ curve.