Production Possibilities - SPARCC：生产可能性sparcc

Production Possibilities - SPARCC：生产可能性sparcc Glenn Cummings Lesson 3- Production Possibility Curve Hoover High School Guns and Butter Curve The ‘Guns and Butter Curve’ is the classic economic example of the "Production Possibility Curve" that demonstrates the idea of opportunity cost. In a theoretical economy with only two goods, a choice must be made between how much of each good to produce. As an economy produces more guns (military spending) it must reduce its production of butter (food), and vice versa. The chart below illustrates this concept. The curve represents all possible choices that the economy can produce. The dots represent two possible choices of outputs. The point is that every choice has an opportunity cost; you can get more of something only by giving up something else. Also notice that the curve is the limit to the production--you cannot produce outside the curve unless there is an increase in productivity. Scarcity is the basis of many economic concepts because it constrains or limits our behavior. Let us explore the notion of constrained behavior by starting with the simplest sort of economic structure, Robinson Crusoe alone on his island. Suppose that each day Crusoe has enough time to catch four fish or to gather eight coconuts. Notice that he cannot have both four fish and eight coconuts. If he uses his time to catch fish, he does not have that time to find coconuts. If he wants both coconuts and fish, he can devote some time to both. If, for example, he spends half the day fishing and the other half-day gathering coconuts, he can have two fish and four coconuts. Fish Coconuts 4 0 3 2 2 4 1 6 0 8 A list of all the possible combinations of fish and coconuts open to Crusoe makes up his production possibilities. The production-possibilities frontier separates outcomes that are possible for an individual (or a group) to produce from those, which cannot be produced. The graph below illustrates Crusoe's production-possibilities frontier. Be sure you understand that the information in the table above is exactly the same as the information in the graph below--these are two different ways of presenting that information. The slope of the frontier in the graph above measures the costs facing Crusoe. In order to get an extra fish, he must sacrifice two coconuts, and to get another coconut, he must sacrifice one-half of a fish. Notice that there is no money involved; cost does not depend on money, but rather exists whenever there is scarcity and choice. In economics, the cost of anything refers to whatever is given up in order to get that thing. The cost of going to college, for example, includes not only the money a person spends on tuition (which could be spent on something else), but also includes the time spent studying and going to classes. The value of this time can be estimated by computing the amount of income a person could earn if he did not go to college. If you reflect on this table, you will see the importance of scarcity. You can think of the production-possibilities frontier as the way economists visualize scarcity. Which of the options will he choose? We cannot tell because we can only compute costs from this information, not benefits. The favorite assumption of economists is that individuals base their actions on the costs and benefits that they see. Benefits depend on the goals Crusoe has, and the production-possibilities frontier has no information about them. Another example… The PPF assumes that all inputs are used efficiently. As indicated on the chart above, points A, B, and C represent the points at which production of Good A and Good B is most efficient. Point X demonstrates the point at which resources are not being used efficiently in the production of both goods, and point Y demonstrates an output that is not attainable with the given inputs.