Confronting Scarcity: Choices In Production
3. Applications of the Production Possibilities Model
KEY TAKEAWAYS
- The ideas of comparative advantage and specialization suggest that restrictions on international trade are likely to reduce production of goods and services.
- Economic growth is the result of increasing the quantity or quality of an economy's factors of production and of advances in technology.
- Policies to encourage growth generally involve postponing consumption to increase capital and human capital.
- Market capitalist economies have generally proved more productive than mixed or command socialist economies.
- Government plays a crucial role in any market economy.