What factor is likely to result in a change in the production possibilities frontier?

The production possibilities frontier (PPF) illustrates the maximum output possibilities for two goods or services, given a set of resources and technology. A shift in the PPF indicates a change in an economy’s capacity to produce, which can result from several factors.

New technology is a critical driver of economic growth because it can enhance productivity and efficiency. For example, advancements in machinery, processes, or methodology can enable producers to create more of a good or service using the same amount of resources. This increase in efficiency may result in an outward shift of the PPF, indicating that more of both goods can be produced than before.

In contrast, a decrease in the workforce would typically lead to a contraction of the PPF, as fewer workers would limit the total output of goods and services. Higher demand for resources might influence prices and allocation but does not inherently expand the economy’s production capabilities. Increased government regulation can impose restrictions that may stifle production or innovation, thereby potentially shifting the PPF inward rather than outward. Thus, new technology is the most likely factor to result in a positive change in the production possibilities frontier, as it directly enhances the economy's productive capacity.