The production possibility curves shown in Chapter. 1, correspond to the various outputs the can be produced using a society's limited resources. While examining different combinations that can be generated, full employment, the use of the best technology, and efficient resources are all assumed. The graphs are demonstrating that the choice to produce more of one product will directly affect assembly of the other. If the result of production lies within the curve, full manufacturing potential is not being exercised. Any point depicted outside the curve is not attainable due to scarce resources.
The law of increasing costs is the reason behind the curve's bowed out shape. It shows us that as particular item's production rises, the opportunity cost of the other item also increases. For example; when 6 cars are gained it is costing .67 tonnes of wheat, and when 4 more cars are manufactured it will sacrifice 1.25 tonnes of wheat. In figure 1.3, we are shown how the curve can shift outward with an increase in scarce resources, in this case technology. The improvement will lead to a decision involving more capital goods and services, more consumer goods and services, or a combination of both. The choice that is made can cause dramatic differences in the growth rate of an economy.
In my own life, my time has become very limited. Working long, late evenings allows me to take care of myself financially, while paying for distance education. I am left with free time in the mornings and on Sunday, but spend it on school work. Being in a long distance relationship, also requires time and money to commute. By deciding to pursue an education, I have created the opportunity cost of having very little time for myself, and less money to spend on other financial obligations or travel.
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