FIGURE 5 CONSUMPTION GOODS, CAPITAL GOODS, AND THE EXPANSION OF THE PRODUCTION POSSIBILITIES FRONTIER
If a nation selects a product mix in which the bulk of goods produced are consumption goods, it will initially produce at point b. The small investment made in capital goods has the effect of expanding the nation’s productive capacity only to PPFb over the following decade. If the country decides to produce at point a, however, devoting more resources to producing capital goods, its productive capacity will expand much more rapidly, pushing the PPF out to PPFa over the following decade.