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One last thing about production possibilities frontiers. Everything said about them so far has assumed that production resources and methods remain fixed. The number of hours put in by workers remains the same, the equipment remains the same, and so on. (This is an example of a ceteris paribus assumption.) There are situations where this assumption doesn’t apply. A firm might take steps to permanently increase its productive capacity by spending some of its income on new, bigger equipment, or on an expansion of factory space. This kind of spending is called capital investment. It results in an outward shift of the PPF over time.
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