What do Shifts and Rotation of the PPC signify? With Diagram

The PPC can shift or rotate when the factors on which it depends changes. It can happen when there is either a change in resources or technology or both.

Shift in the PPC

The PPC can shift forward (towards right) as well as backwards (towards left). This can happen when either there is a change in resources or technology or both.

When the nation’s resources increase, that means it can increase the production of both the goods, thus leading to a shift in the PPC forward or towards right.

In the diagram the PPC ab shifts to a₁b₁ when there is an increase in resources in the nation leading to an increase in the production of both rice and wheat.

In the same way, when the nation’s resources decrease, that means it has now less resources for the production of goods, thus leading to a shift in the PPC backwards or towards left. In the diagram, the PPC ab shifts backward to a₂b₂ when there is a decrease in resources in the nation leading to a decrease in the production of both rice and wheat.

When the technology in the nation improves in such a way that it increases the production of both the goods, then also the PPC shifts forward.

Rotation of PPC

Rotation in the PPC may occur when the production of any one good increase or decreases while that of the other remains the same. This can happen when the technology for the production of one of the goods improves while that of the other remains the same. For example, high production seeds for the production of wheat will increase the production of wheat rotating the PPC outwards while production of rice remains the same.

In the diagram the PPC rotates from ab to a₁b when technology in the production of wheat improves, where we can see production of wheat eat has increased and rice has remained the same

Similarly, high production seeds for the production of rice will increase the production of rice rotating the PPC outwards while production of wheat remains the same.

In the diagram the PPC rotates from ab to ab₁ when technology in the production of rice improves, where we can see production of rice has increased and wheat has remained the same.

Key Points

When there is an increase in the nation’s resources, the PPC shifts forward or towards right.
When the technology for the production of one of the goods improves while that of the other remains the same, the PPC rotates towards that good whose technology has improved.

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