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Class 11th eco notes, Study notes of Economics

Economics

Best for 2026 standard 11th best notes

Typology: Study notes

2024/2025

Available from 11/20/2025

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1 | P a g e
Class: +1
Subject: Economics
Part: Micro Economics
Chapter-2
Central Problems of an Economy
Assignment No.: 14 Date: 29-07-2021
Question: Discuss various causes responsible for the shifting and rotation of PPC.
Answer: PPC depends on the following two conditions:
1. Quantity of resources
2. Level of technology.
A production possibility curve is drawn with a given endowment of resources and a given technology level.
Accordingly, a PPC will shift or rotate under the following two conditions:
1. If there is a change in the resource endowment of the economy i.e. if there is a change in the
resource availability to the economy.
2. If there is a change (appreciation/depreciation) in the existing level of production technology.
The two conditions are analysed below.
1. Change in the amount of Resources: With a given endowment of resources and level of
technology, let us assume that the initial PPC of the economy is represented by AB. Now, if suppose that
the economy discovers new sources of resource, then it means that the economy can now produce more of
both capital goods as well as consumer goods. The increase in the resource availability will shift the initial
PPC outwards to the new PPC CD.
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Class: + 1

Subject: Economics

Part: Micro Economics

Chapter- 2

Central Problems of an Economy

Assignment No.: 14 Date: 29 - 07 - 2021

Question: Discuss various causes responsible for the shifting and rotation of PPC. Answer : PPC depends on the following two conditions:

1. Quantity of resources 2. Level of technology. A production possibility curve is drawn with a given endowment of resources and a given technology level. Accordingly, a PPC will shift or rotate under the following two conditions: 1. If there is a change in the resource endowment of the economy i.e. if there is a change in the resource availability to the economy. 2. If there is a change (appreciation/depreciation) in the existing level of production technology. The two conditions are analysed below. 1. Change in the amount of Resources : With a given endowment of resources and level of technology, let us assume that the initial PPC of the economy is represented by AB. Now, if suppose that the economy discovers new sources of resource, then it means that the economy can now produce more of both capital goods as well as consumer goods. The increase in the resource availability will shift the initial PPC outwards to the new PPC CD.

On the contrary, decrease in the resource availability is represented by an inward shift of the initial PPC AB to EF.

2. Change in the Production Technology: The change in the technology may either take place in the production of both the goods or in the production of either of the two goods. a. Change in the Technology of Production of Capital Goods - If the technology employed in the production of capital goods appreciates (or depreciates), then the production of capital goods will be more (or less) with the same level of resources and the PPC will pivot outwards (or inwards) with the same vertical intercept i.e. OA. In the figure, with the appreciation of the production technology of the capital goods, the initial PPC AB pivots outwards to AC. On the other hand, with the depreciation of the production technology of the capital goods, the initial PPC AB pivots inwards to AD.

Prepared By:

Dr. Amit Juneja

Lecturer Economics

Shaheed Balwinder Singh Government Senior Secondary Smart School,

Sabuana (Fazilka).

Mb. 8427476700

c. Change in Technology of Production of both the goods - If the technology employed in the production of both the goods appreciates (or depreciates), then the economy can produce more (or less) of the both the goods. In the figure, with the appreciation of the production technology of both the goods, the initial PPC AB will shift outwards (rightwards) to new PPC CD. On the other hand, with the depreciation of the production technology of both the goods, the initial PPC AB will shift inwards (leftwards) to new PPC EF.