Not able to use its resources as efficiently, and we're Now what happens if Utenslandia goes into some type of recession. That point x would be an efficient production for Utenslandia. So this point right over here, this combination of spoons which would be that many spoons and that many forks, this combination over here, If it efficiently utilizedĪll of its resources, then it will produce someĬombination of forks and spoons that sit on the production Now one way to understand this production possibilities curve is it shows what can be efficiently That makes utensils and obviously, most countriesĪre much more complex, they don't only produce someĬombination of two things but this helps us, this is a nice model for understanding whatĬountries might be capable of. Production possibilities curve for our country of Utenslandia What this curve is, and we touched on it on other videos, this is the If it only focused on spoons, well it could produce that many but then it would produce no forks. Of its resources on spoons, well then it would produce fewer forks and then the more spoons it produces, it will produce fewer and fewer forks all the way to the point that Then if tried to focus some of its energy, some Produce that many forks and no spoons, and but Puts all of its energy into forks, well it would And so this axis is the quantity forks, this axis is the quantity of spoons and let's say that if it So it can produces forks, or it could produce spoons. That can only produce one of two goods or someĬombination of them. That we have some country, let's call it Utenslandia, (Opportunity Cost) curve because of the situation 'if what use to be the forks and/or spoons at the vertical line going down and the other line horizontal representing sporks slowly increasing? Would this be a cause of the Decreasing O.C. Even with the destroyed factories, less laborers, etcetera there is still an increase of production. What I am getting at is where does innovation stand? Is it its own factor/"Scarcity" that makes growth because of the effects it has? Does it fall under specifically Technology, Labor, Capital, or Land or can it be all of them? For a scenario to help, if Platelandia attacks and because of this growing war a new way of armament is formed the Spork. But because of this new factories have been made or re-compensated to fit these new requirements making a change in Capital. If a worker finds a way to make spoons and forks faster by creating sporks then that concludes a new technology, but also this allows workers to make more with less seemingly reducing labor.
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