Final answer:
Short run economic growth is shown as an outward shift of the PPF curve, representing an economy's increased capacity to produce goods. This is due to factors such as increased resources or improvements in technology.
Step-by-step explanation:
Short run economic growth on a Production Possibilities Frontier (PPF) curve is illustrated by an outward shift of the curve. As an economy's resources increase or become more efficient, it can produce more goods and services, leading to a shift of the PPF to the right or upwards. This shows a higher level of productive capacity. The PPF curve is typically drawn as an outward-bending curve due to the Law of Diminishing Returns, which states that as we allocate more resources to the production of one good, the additional gains in output will eventually diminish. The outward-bending shape of the PPF reflects this principle, as the gains from reallocating resources from one good to another become smaller, which causes the curve to bend outward. However, short run economic growth caused by an increase in resources or improved technology will push the entire curve outwards, indicating that the economy can now produce more of both goods.The curvature of the Production Possibilities Frontier (PPF) reflects the concept of short-run economic growth.
As more resources are allocated to education, the gains in production initially increase rapidly, but gradually diminish, resulting in a relatively flat slope on the PPF curve. Conversely, as more resources are allocated to healthcare, the gains in production also increase initially but at a slower rate, resulting in a steeper slope on the PPF curve.This outward-bending shape of the PPF is a result of the law of diminishing returns. It suggests that in the short run, there are limits to how efficiently resources can be allocated to different sectors of the economy. As resources are shifted from one sector to another, the opportunity cost of producing more of a particular good increases.To summarize: Short-run economic growth is depicted on the PPF curve by the outward-bending shape. Increasing resources allocated to one sector initially leads to large gains, which gradually diminish, resulting in a flat slope. The law of diminishing returns explains this relationship.