Can someone please tell me how or why the curve shifts outward.

In the textbook, I was given that:

"But if we cut production of mobile phones to 3 million this year, we can produce 2 mobile phone factories at point K."

"Then next year, our PPF shifts outward because we have more capital"

I might be wrong here, but is it saying that because we reduced production of mobile phones, we can use the spare $$$, to invest in capital resources to speed up/increase the production of mobile phones next year?

If so, then why is it talking about 2 mobile phones at point K if we reduce production cost to 3 million. Is this related to the outward shift?

Also, why is the curve asymmetric?

Any help would be greatly appreciated.

enter image description here

  • 1
    $\begingroup$ I'm voting to close this question as off-topic because we requested clarification from the OP 2 years ago. $\endgroup$
    – Giskard
    May 16 '19 at 15:27

I chose not to vote to close this question, because I think it is a good opportunity to showcase how important it is for the OPs to offer comprehensive input related to their question.

What goes wrong here?

As is and with the input given by OP, the pictured Production Possibility Frontier is totally wrong. Why? Because it appears to represent a substitution effect between resources/goods, where the one (factories to make mobile phones) is necessary for the production of the other (mobile phones). So for example the point where the blue line cuts the horizontal axis appears to be saying:

"If we eliminate factories for mobile phones, we can produce 5 million mobile phones".

I find hard to believe that the textbook authors are that incompetent, so there must be more to the story -and the OP should provide this additional input, otherwise the question should rightfully be closed.

  • 1
    $\begingroup$ Okay then. As a further input, I found that the line "why is the curve asymmetric?" indicated that the OP did not spend enough time on the question and does not really know what he is asking. I could be wrong, but it is the OP's burden to make his question clear. $\endgroup$
    – Giskard
    Mar 18 '17 at 18:54
  • $\begingroup$ @denesp Indeed, it would appear so. Let's see if we will get any reaction from the OP. $\endgroup$ Mar 18 '17 at 18:59

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