PPC for wheat and machines when a new seed triples wheat yield

The PPC to begin with. With wheat on the x-axis and machines on the y-axis, the production possibility curve (PPC) shows, for each quantity of machines, the most wheat the economy can grow (and the other way round) when its resources are fully and efficiently employed. It is drawn for a given state of technology and given resources. Its slope at any point is the marginal rate of transformation: the machines that must be given up for one more unit of wheat, which is the opportunity cost of wheat.

Effect of the new seed. We read three times more wheat as three times the wheat obtained before from the same land, labour and capital. The discovery is a technical advance in wheat farming only; machine factories do not use seed, so nothing changes there. When an efficiency gain favours one kind of good, the PPC rotates in favour of that good rather than moving out evenly.

• Wheat intercept. If every input goes into wheat, output is now three times what it was, so the point on the x-axis moves out to three times its old distance from the origin.
• Machine intercept. If every input goes into machines, the seed plays no part and machine output is exactly as before, so the point on the y-axis stays where it is.
• Points in between. For any division of inputs, machine output is unchanged while wheat output triples, so each point moves horizontally to the right. For instance (our own figures), a combination of 40 tonnes of wheat and 30 machines becomes 120 tonnes of wheat and 30 machines.

The new PPC. The curve rotates outward, pivoting on its unchanged intercept on the machine axis and swinging out along the wheat axis. It becomes flatter: at any given output of machines, one more machine now means giving up three times as much wheat as before, and one more tonne of wheat costs only a third of the machines it used to. So the opportunity cost of wheat in terms of machines falls to a third, and that of machines in terms of wheat triples.

Conclusion. A seed that raises wheat yields alone shifts the PPC outward only along the wheat axis: the wheat intercept triples, the machine intercept is unchanged, and for any output of machines the economy can now have more wheat.