<P> If the two production goods depicted are capital investment (to increase future production possibilities) and current consumption goods, the higher is 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> <P> In microeconomics, the PPF shows the options open to an individual, household, or firm in a two - good world . By definition, each point on the curve is productively efficient, but, given the nature of market demand, some points will be more profitable than others . Equilibrium for a firm will be the combination of outputs on the PPF that is most profitable . </P> <P> From a macroeconomic perspective, the PPF illustrates the production possibilities available to a nation or economy during a given period of time for broad categories of output . It is traditionally used to show the movement between committing all funds to consumption on the y - axis versus investment on the x-axis . However, an economy may achieve productive efficiency without necessarily being allocatively efficient . Market failure (such as imperfect competition or externalities) and some institutions of social decision - making (such as government and tradition) may lead to the wrong combination of goods being produced (hence the wrong mix of resources being allocated between producing the two goods) compared to what consumers would prefer, given what is feasible on the PPF . </P>

Explain the difference between constant and increasing opportunity cost