Tax Impact on the Production Possibilities Curve

Conceivably, it distorts relative prices, leaning consumption away from taxed items, generating points closer to the border and holding room for further expansion and unexploited potential.

Anticipated results feature progressive reductions in the range of produced quantities in accordance with traditional supply and demand theory, thus remaining consistent with the outer edge of the curve.

The VAT is a neutral revenue tool designed to replace other taxes, leaving net purchasing power and distributional effects unchanged, so movement about the PPC graph should theoretically stay static.

This form of indirect taxation encourages savings and investment, propelling a fast track towards full utilization of frontiers and placing previously unattainable equilibria points.