The bowed -...

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The bowed-out, concave shape of the PPF is due to the presumption that the economy's resources  are not equally well suited to the production of both goods  X  and  Y . For example, some resources  may not be very useful in producing good  X  but are very useful in producing good  Y . If the economy  were initially using all of its resources to produce 6 units of  X —point G on the PPF—but then  decided to produce 1 less unit of good  X —5 units of  X —some of the resources that are better suited  to producing good  Y  would be released with the result that 5 units of good  Y  could now be produced —point F on the PPF. If the economy decided to produce only 4 units of good  X , then even more  resources would be released, and 3 more units of good  Y , for a total of 8 units of good  Y , could now  be produced—point E on the PPF. 
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This note was uploaded on 11/18/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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