The Production Possibilities Curve
-2 pairs of skis) We get the same value between points B and C, and between points A and C.
all other goods and services.This second category includes the entire range of goods and services the economy can produce, aside from national defense and security. Clearly, the transfer of resources to the effort to enhance national security reduces the quantity of other goods and services that can be produced. In the wake of the 9/11 attacks in 2001, nations throughout the world increased their spending for national security. This spending took a variety of forms. One, of course, was increased defense spending. Local and state governments also increased spending in an effort to prevent terrorist attacks. Airports around the world hired additional agents to inspect luggage and passengers.
other goods and servicescould be produced. In terms of the production possibilities curve in
Yes,and the key lies in comparative advantage. An economy achieves a point on its production possibilities curve only if it allocates its factors of production on the basis of comparative advantage. If it fails to do that, it will operate inside the curve.
Pick me up and look me over. What do you see? Not much meets the eye there's some wood, lacquer, the printed labeling, graphite lead, a bit of metal, and and an eraser.Read then observers how commonplace that pencil is and yet what a marvel it is.
I, Pencil,The Freeman, December, 1958.