Suppose Canada produces only cars and trucks. The resources that are used in the production of these two goods are not specialized-that is, the same set of resources is equally useful in producing both trucks and cars. The shape of Canada's production possibilities frontier (PPF) should reflect the fact that as Canada produces more trucks and fewer cars, the opportunity cost of producing each additional truck The following graphs show two possible PPFS for Canada's economy: a straight-line PPF (PPF) and a bowed-out PPF (PPF,). (? (? Graph 1 Graph 2 PPF, PPF, CARS CARS
Suppose Canada produces only cars and trucks. The resources that are used in the production of these two goods are not specialized-that is, the same set of resources is equally useful in producing both trucks and cars. The shape of Canada's production possibilities frontier (PPF) should reflect the fact that as Canada produces more trucks and fewer cars, the opportunity cost of producing each additional truck The following graphs show two possible PPFS for Canada's economy: a straight-line PPF (PPF) and a bowed-out PPF (PPF,). (? (? Graph 1 Graph 2 PPF, PPF, CARS CARS
Chapter2: Economic Tools And Economic Systems
Section: Chapter Questions
Problem 3.5P
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Transcribed Image Text:1. Specialization and production possibilities
Suppose Canada produces only cars and trucks. The resources that are used in the production of these two goods are not specialized–that is, the
same set of resources is equally useful in producing both trucks and cars.
The shape of Canada's production possibilities frontier (PPF) should reflect the fact that as Canada produces more trucks and fewer cars, the
opportunity cost of producing each additional truck
The following graphs show two possible PPFS for Canada's economy: a straight-line PPF (PPF, ) and a bowed-out PPF (PPF2).
(?
Graph 1
Graph 2
PPF,
PPF
1
CARS
CARS
Transcribed Image Text:(?
Graph 1
Graph 2
PPF2
PPF
1
TRUCKS
TRUCKS
Based on the previous description, the trade-off Canada faces between producing trucks and cars is best represented by
CARS
CARS
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