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Provide a production possibilities example involving choices between military defense and civilian goods.

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Joshua Stredder
Joshua StredderLv10
6 Apr 2021

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Related questions

The economic concept of guns or butter means what?

A. A person can spend money on either sports equipment or food.
B. A company must decide whether to manufacture guns or butter.
C. A government must decide to produce more or less military or consumer goods.
D. A government can buy unlimited military and civilian goods if it is rich enough.

6. A Prime Minister of Canada promises to simultaneously produce more defense goods without any decrease in the production of other goods. This promise can be valid a. if Canada is producing at a point on its production possibilities frontier. b. if Canada is producing at a point inside its production possibilities frontier. c. if Canada is producing at a point beyond its production possibilities frontier. d. only of the production possibilities frontier shifts rightward.

Imagine a society that produces military goods and consumer goods, which we will 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 that is impossible for the economy to achieve. Show a point that is feasible but inefficient.

c. Imagine that the Society has two political parties, called Hawks (who want a strong military) and the Doves (who want a small military). Show a point on your production possibilities frontier that the Haws 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.

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