Question

What is the role of improved technology on a PPC?

Answer 1

Dear student,

We know that a PPC shows various combination of two goods that an economy can produce with the given resources and the level of technology. For producing additional units of one good, some of the units of the other good would have to be sacrificed.

If there is an improvement in the technology then more of both the goods can be produced simultaneously. Such a change is reflected by an outward shift the PPC.