An increase in the quantity and/or productivity of resources make is possible to produce more pillows and blankets. This is indicated by a rightward or outward shift of the production possibility curve.
According to our original production possibility curve it is possible to produce either 50 pillows or 5 blankets. An increase in the quantity and/or productivity of resources for the production of both pillows and blankets imply that it is possible to increase the maximum output of both pillows and blankets.
The maximum potential output of pillows increases from 50 to 70 and the maximum output of blankets increases from 5 to 7 and the production possibility curve shifts outwards.
At every point on the new production possibility curve ( for instance B and D) more pillows and blankets are produced and economic growth occurs.
A leftward or inward shift of the production possibility curve indicates that potential output has declined. This can be the result of a decrease in resources and/or a decrease in the efficiency (productivity) of resources.