Question

There are three main mechanisms by which a country’s production possibility frontier is expanded. Name the three mechanisms and for each one illustrate what happened in Britain during the ‘industrial revolution’.

Answer 1

Production possibilities frontiers (PPF) can be expanded by a technology development, improvement the management expertise and by increasing of the available quantities of the production factors.
In Britain during the “industrial revolution” there was a fast technological development, which was the main factor for the PPF expansion. At the same time, the quantities of production factors remained approximately the same and there was no a significant improvement in management expertise.