Self-Sufficiency By ignoring each other. Each consumes what they each produce The production possibilities frontier is also the consumption possibilities frontier. Without trade, economic gains are diminished。 Harcourt, Inc. items and derived items copyright C 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Self-Sufficiency By ignoring each other: Each consumes what they each produce. The production possibilities frontier is also the consumption possibilities frontier. Without trade, economic gains are diminished
Production possibilities Frontiers Meat (pounds) (a The Farmers Production Possibilities Frontier 2 2 Potatoes(pounds) Harcourt, Inc. items and derived items copyright C 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Production Possibilities Frontiers Potatoes (pounds) Meat (pounds) 4 2 1 2 (a) The Farmer’s Production Possibilities Frontier 0 A
Production possibilities Meat Frontiers (pounds) (b The Rancher's Production Possibilities Frontier 20 2.5 Potatoes(pounds) Harcourt, Inc. items and derived items copyright C 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Production Possibilities Frontiers Potatoes (pounds) Meat (pounds) 5 40 20 2.5 (b) The Rancher’s Production Possibilities Frontier 0 B
The farmer and the rancher Specialize and trade Each would be better off if they specialized in producing the product they are more suited to produce, and then trade with each other The farmer should produce potatoes The rancher should produce meat Harcourt, Inc. items and derived items copyright C 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Farmer and the Rancher Specialize and Trade Each would be better off if they specialized in producing the product they are more suited to produce, and then trade with each other. The farmer should produce potatoes. The rancher should produce meat