Introduction - Interdependence and the gains from trade - A parable for the modern economy
3 important questions on Introduction - Interdependence and the gains from trade - A parable for the modern economy
Why is the Production Possibilities Frontier useful in showing trade-offs?
Because the PPF shows all the possible outcomes of production/consumption.
When is the consumption equal to the production, in the Production Possibilities Frontier?
When people choose to be self-sufficient, rather than trade with each other. Then each consumes exactly what he/she produces.
Under what conditions is the PPF linear instead of bowed out?
When there are no diminishing returns, so there the opportunity costs is constant.
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