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Production possibilites frontier and trade

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Please provide a detailed explanation on the following questions. Include a diagram and at least 200 words.

1. How does trade affect the production possibilities frontier?

2. Give an argument for or against trade. Explain your reasons.

3. What should government do to support your argument?

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Solution Summary

This posting helps with problems about production possibilities in frontiers and trade. It answers questions about how trade affects the production possibilities frontier, gives an argument for or against trade, and what a government should do to support your argument about trade. The explanation is given in 235 words, along with a diagram.

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1. How does trade affect the production possibilities frontier?

Trade doesn't necessarily do anything to the PPF. It has the potential to shift it if there is technology that would increase the efficiency of production. However, it does affect the price of goods. If the international price is different than the price in a given country, countries can ...

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