lectur12-page16

lectur12-page16 - goods and services. Points not on the...

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16 We can now illustrate the PPC curve: $ of Ag. Goods per year unattainable attainable production frontier $ Non-Ag. goods per year Above is a graphical illustration of a PPC relating the dollar value of agricultural goods and services produced per year to the dollar value of non- agricultural goods and services produced per year. Notice that the production possibilities curve is truly a curve, not a straight line. It is curved due to the fact that resources used in the production of agricultural or non agricultural production are not perfectly mobile between the two alternatives. The actual curve itself can be considered a boundary or frontier. All points on or within the PPC are considered to be “attainable combinations” of ag. and non-ag.
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Unformatted text preview: goods and services. Points not on the production frontier that are outside (points above and to the right of the PPC) are considered to be unattainable combinations of ag. and non-ag. commodities. Points outside of the production frontier are considered unattainable because we do not currently have the resources or the technology to produce those combinations of ag. and non-ag. goods and services. If we had access to more resources, or new technology, then the production frontier would be shifted outward and would encompass some new points that were once unattainable....
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