PPC for wheat and machines when every input doubles in efficiency

The PPC to begin with. Put wheat on the x-axis and machines on the y-axis. The production possibility curve (PPC) joins the combinations of the two goods that give the most wheat obtainable for each quantity of machines, and the other way round, when all the economy's resources are in full and efficient use. Each curve is drawn for a fixed stock of resources and a fixed level of technology, so anything that changes how much the inputs can produce moves the curve itself rather than the economy along it. Points beyond the curve cannot be reached because the factors available are limited.

Effect of doubled efficiency. If labour, land and capital all become twice as efficient, each unit of every input now gives twice the output it gave before, in the wheat farms and in the machine factories alike. The quantity of inputs is the same; only what they yield has changed. An economy whose production is more efficient can produce more of both goods from its resources.

• Wheat intercept. With all inputs in wheat, the economy now grows twice as much wheat, so the point on the x-axis moves out to twice its old distance from the origin.
• Machine intercept. With all inputs in machines, it now makes twice as many machines, so the point on the y-axis also doubles.
• Points in between. Any split of inputs between the two goods now gives twice as much of each. If the old curve passed through 60 tonnes of wheat and 25 machines (our own figures), the new one passes through 120 tonnes and 50 machines: every point moves out along its ray from the origin to twice its old distance.

The new PPC. The whole curve shifts outward, to twice its old distance from the origin at every point, and keeps its bowed-out shape. Because both outputs double in the same proportion, the slope at each point of the new curve equals the slope at the matching point (on the same ray) of the old one, and since the slope measures the opportunity cost of wheat in terms of machines, that cost along any ray is unchanged. Combinations that lay outside the old curve, and could not be produced, can now be produced.

Conclusion. A doubling in the efficiency of all factor inputs is an expansion of the economy's capacity to produce: the PPC shifts outward on both axes, the wheat and machine intercepts each double, and the economy can have more of both goods.