Technological improvement of production possibilities curve

Assume improvement takes place in the technology of producing forklifts however not in the technology of producing automobiles. Draw the new production possibilities curve. Now suppose that a technological advance takes place in generating automobiles however not in producing forklifts. Draw the new production possibilities curve. Now draw production possibilities curve which reflects technological improvement in the production of both of the products.

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See the graph given below. PPC1 illustrates improved forklift technology. PPC2 illustrates improved auto technology. PPC3 illustrates improved technology in producing both products.

1006_Technological improvement in the production possibilities curve.png

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