Management

Management

​Scarcity; opportunity, cost and efficiency all consist of an economic model known as the production possibilities curve. I will discuss if a reduction in trade barriers cause a country to move closer to its production possibilities curve or if it causes the production possibilities curve to shift outward, what can be said about an economy that is operating inside the production possibilities frontier, two factors that would cause the production possibilities curve to shift outward in reference to economic growth, the role that comparative advantage play in trade among member nations as well as the effect on the standard of living among trading nations and some Advantages and Disadvantages of Free trade.
​Does a reduction in trade barriers cause a country to move closer to its production possibilities curve or does it cause the production possibilities curve to shift outward? I strongly believe that a reduction in trade barriers does cause a country to move closer to its production possibilities curve. An increase in trade barriers would cause the production possibilities curve to shift outward. “For example, fewer skis are produced because when more snowboards are produced it requires resources to be shifted out of the ski production. Fewer snowboards are produced because more skis have been produced which causes an outward shift in resources from the snowboard production.” (Rittenberg L. and T. Tregarthen (2009). Chapter 2: section 2: Confronting Scarcity: Choices in Production Principles of Microeconomic Analysis. FlatworldKnowledge.com. Retrieved August 6, 2012)
​What can be said about an economy that is operating inside the production possibilities frontier? An economy operating inside the production possibilities frontier causes the inability of the maximum output to be produced. An economy can produce any combination on or inside the frontier, but producing outside the frontier is not sometimes feasible given a particular economy’s resources. An...

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