Final answer:
An outward shift of the production possibility curve signifies economic growth and an increase in a society's ability to produce goods and services, which can occur due to various factors like technological advancements or increased resource availability. This reflects gains in productive efficiency and could potentially lead to higher living standards without additional resource allocation.
Step-by-step explanation:
When the production possibility curve (PPC), also referred to as the production possibility frontier (PPF), shifts outwards, it is indicative of economic growth. This outward shift allows for the production of more goods and services within an economy without increasing the input of resources, reflecting an improvement in productivity. Such a shift could be due to factors such as technological advancements, an increase in the quantity or quality of resources, improvements in the workforce, or better management and organizational strategies.
The negative slope of the PPC represents the trade-off between two different goods, indicating that to produce more of one good, society must produce less of the other, reflecting the concept of scarcity. The bowed-out shape of the curve illustrates the law of increasing opportunity cost, this law posits that as the production of a good increases, the opportunity cost of producing an additional unit rises, since resources are not equally efficient in producing all goods.
In the context of an economy, the rightward shift of the PPC signifies enhanced productive efficiency and potential increases in allocative efficiency, suggesting that the economy is capable of producing more at no additional cost. Such an improvement is beneficial as it can imply higher standards of living without requiring more inputs.