Imagine a society that produces military goods and consumer...

Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter" a. Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. b. Show a point on the graph that is impossible for the economy to achieve. Show a point on the graph that is feasible but inefficient. c. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point that the Doves might choose. d. Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.

Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter"
a. Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape.
b. Show a point on the graph that is impossible for the economy to achieve. Show a point on the graph that is feasible but inefficient.
c. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point that the Doves might choose.
d. Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.

Key Concepts

Peace Dividend

The concept of a peace dividend refers to the economic benefits that can arise when a country reduces military spending. This reallocation of resources can lead to increased production in other sectors, providing more goods or services that benefit society in areas like consumer spending, ultimately shifting the economy toward more socially beneficial outcomes.

Production Efficiency

Production efficiency refers to a situation where an economy is producing on its PPF, meaning it is utilizing all available resources without waste. Points on the PPF represent efficient production levels, while points inside the curve indicate that resources are underutilized, leading to inefficiencies in production.

Resource Trade-offs

Resource trade-offs involve the decisions an economy makes when allocating limited resources among competing uses. The PPF visually represents these trade-offs and helps elucidate how economies must balance between different outputs – increasing production of one good necessitates a decrease in production of another.

Production Possibilities Frontier

The Production Possibilities Frontier (PPF) is a curve that represents the maximum combinations of two goods that an economy can produce using all of its resources efficiently. It illustrates the trade-offs between different choices and shows the boundary between feasible production and what is unattainable given current resources and technology.

Opportunity Cost

Opportunity cost is the value of the next best alternative that must be forgone when a decision is made to produce one good over another. It is an essential concept in understanding choices in resource allocation, as moving along the PPF involves sacrificing some quantity of one good to gain more of the other, often increasing as production shifts due to the law of increasing opportunity costs.

Transcript

00:01 So this question says, imagine a society that produces military goods and consumer goods, which will call guns and butter.

00:10 So i guess the military goods are called guns and the consumer goods are called butter.

00:27 So now the first question, draw a drop production possibility frontier for guns and butter.

00:35 Using the concept of opportunity costs explain why it most likely has a bold out shape so we're going to be drawing the production possibility production possibility runs here okay it's gonna look like it's gonna look like this somewhat and then um and then this side is butter and this side is gone and this is zero so the frontier should look like this i think it should look bouncy like around this side yeah and from the what we just drew it you can tell that the production possibility frontier demonstrates the cost producing one good against another and why it's most likely to have a bow out shape at efficiency a movement along the measures you know how many one good can must be sacrificed to make london so that's kind of what the production possibility front is about and this is why the curve is bowed outward because a country as a country makes more a good it becomes more difficult to increase production so you can say it is bold outward because as a country makes more of a good it becomes more difficult to increase production now the second question show a point on the graph that is impossible for the economy to achieve and show a point on the graph that is feasible but inefficient so back to the graph this is the graph right this is going to be a point where it is inefficient and what's name is a and this is going to be a point where it is impossible so um we're going to explain that any point in the shaded area mind you these are the shaded area area any point in the shaded area that it's not you know along the outer curve is possible so all this um all the parts that are known in the shaded area all the part that are in shaded area but are not along the you know outer curve is possible but it's inefficient so everything in here is inefficient because this is the curve and everything in year is possible but it's inefficient any part that's not within the shaded area which is outside of year requires more resources than area available and therefore impossible to achieve so everything outside this curve outward being possible to achieve so we're going to be explaining that any point in the shaded and let me you know shade it so it's not confusing so these are the shaded area requires more resources and are you possibly to achieve now the next question imagine that the society has two political leaders called the ox who wants a strong military and the dove or wants a smaller military so they have to political leaders um the ox and the dogs now show a point on your production possibility frontier that the ox might choose and a point that the doves might choose so since the um the ox want a strong military the ox wants a strong military and the dogs want a smaller military right now i want to choose a point on the graph, on the possibility front here, that the ox and the dogs might choose.

08:17 Now, going back to the front here, we could say that the ox might choose a point around here, and the dogs might choose a point around here.

08:28 So we write dogs and we write ox.

08:35 And why do we say so? the doves we prefer a point that produces much more butter than guns because they value peace remember the said the doves the one a small military so the one to choose a point that has more border than guns because they want piece and the ox which is a point where guns are more produced arts than border because they value security so more border than guns.

09:47 This was the value security...

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