The Production Possibilities Frontier

An economy is not likely to run into these limits at the same time so we are going to assume that labour and capital are perfectly interchangeable for both of these products. But say this economy suddenly discovered another huge reserve of fossil fuels. What that would look like on this chart is the land constraint shifting outwards because while the country hasn't added more hectares to its landmass the land that it does have has become more productive because it's full of oil. We can now draw a new production possibility frontier and you'll notice that the intersection point has shifted. Rupkazinski's theorem therefore shows that natural resource wealth impacts the supply of other goods and services in the long term as well as