Imagine an economy that produces capital goods and consumption goods. What will happen to its production possibilities curve if some of its existing capital stock wears out and is not replaced? How will your answer differ if more than enough capital is produced to replace the capital that wears out?

With less capital (assuming no growth in other resources or technology), this economy will not be able to produce as much as it could before the capital wore out. The production possibilities curve will shift inward, towards the origin. With more capital (assuming no change in other resources or technology), this economy will be able to produce more than it initially could. Its production possibilities curve will shift outward, away from the origin.