<P> With economies of scale, the PPF would curve inward, with the opportunity cost of one good falling as more of it is produced . Specialization in producing successive units of a good determines its opportunity cost (say from mass production methods or specialization of labor). </P> <P> The two main determinants of the position of the PPF at any given time are the state of technology and management expertise (which are reflected in the available production functions) and the available quantities of factors of production (materials, direct labor, and factory overhead). </P> <P> Only points on or within a PPF are actually possible to achieve in the short run . In the long run, if technology improves or if the supply of factors of production increases, the economy's capacity to produce both goods increases; if this potential is realized, economic growth occurs . That increase is shown by a shift of the production - possibility frontier to the right . Conversely, a natural, military or ecological disaster might move the PPF to the left in response to a reduction in an economy's productive capability . Thus all points on or within the curve are part of the production set: combinations of goods that the economy could potentially produce . </P> <P> If the two production goods depicted are capital investment (to increase future production possibilities) and current consumption goods, the higher the investment this year, the more the PPF would shift out in following years . Shifts of the curve can represent how technological progress that favors production possibilities of one good, say guns, more than the other shifts the PPF outwards more along the favored good's axis, "biasing" production possibilities in that direction . Similarly, if one good makes more use of say capital and if capital grows faster than other factors, growth possibilities might be biased in favor of the capital - intensive good . </P>

The principal concepts in the production possibilities frontier economic model