Which describes a shift of the PPF?

• A. A movement along the frontier due to a reallocation of resources.
• B. A change in the price of a good.
• C. An outward or inward movement of the entire frontier caused by a change in productive capacity (e.g., new technology, more resources, war).
• D. A shift in demand due to tastes.

Answer: (C)

Shifts of the production possibilities frontier reflect a change in the economy’s overall ability to produce. When productivity improves (new technology), when more resources become available, or when events like war alter the total resources, the maximum combinations of goods the economy can produce change, so the frontier itself moves outward or inward. This is a shift because the whole constraint has changed. In contrast, moving along the frontier simply reallocates resources between goods without changing total capacity. Changes in price or in tastes affect what is produced or demanded but do not alter the economy’s productive capacity, so they don’t shift the frontier.