Give a definition of an advance in technology. Suppose that you are drawing a PPF for civilian goods and military goods, describe the effect on the PPF of an advance in technology in both civilian goods and military goods. How would the impact on the PPF be different if the technological improvement only helped in the production of military goods, but not civilian goods?

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Give a definition of an advance in technology. Suppose that you are drawing a PPF for civilian goods and military goods, describe the effect on the PPF of an advance in technology in both civilian goods and military goods.  How would the impact on the PPF be different if the technological improvement only helped in the production of military goods, but not civilian goods?


ANS:
An advance in technology commonly refers to the ability to produce more output with a fixed amount of resources (or the same amount of output with a smaller amount of resources). When technology advances in the production of both products the PPF shifts outward.  When technology advances in the production of military goods, but not civilian goods, the PPF shifts outward along the axis for military goods and the intercept remains constant along the axis for civilian goods.

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