Final answer:
Long-run economic growth is represented on a PPF curve by the outward shift of the curve, indicating an increased capacity to produce goods and services due to factors like capital investment, technological progress, and catch-up growth. The curved shape of the PPF reflects the law of diminishing returns, and points on the curve demonstrate productive efficiency. Different economies can increase total production through specialization and trade based on comparative advantage.
Step-by-step explanation:
Long-run economic growth is indicated on a Production Possibility Frontier (PPF) curve by the outward shift of the curve itself. The PPF represents the maximum possible output of two goods or services that an economy can achieve when all resources are fully and efficiently utilized. When an economy experiences growth over time, due to factors such as investment in physical and human capital, advancements in technology, or the benefits of catch-up growth, the curve moves outward, signifying an increase in the economy's capacity to produce goods and services.
The PPF curve is typically drawn as a bowed-outward shape due to the law of diminishing returns, indicating the increasing opportunity cost of producing one good over another. Productive efficiency is shown by any point on the PPF, where an economy can no longer produce more of one good without producing less of the other. Allocative efficiency, on the other hand, is found at the point on the PPF where the combination of goods being produced reflects society's preference.
As the PPF curve shifts outwards due to economic growth, it allows the society to enjoy a greater quantity and variety of goods and services. Countries may have different PPF curves with varying shapes due to their comparative advantages, which can enhance overall global production through specialization and trade. The economic approach helps address positive statements, describing what is, and normative statements, prescribing what ought to be, rooted in the observation of actual behavior in economies.