Authors libby rittenberg 105

 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 TRY IT! Draw a production possibilities curve for an economy that can produce two goods, CD players and jackets You not have numbers for this one—just draw a curve with the usual bowed-out shape Put the quantity of CD players per period on the vertical axis and the quantity of jackets per period on the horizontal axis Now mark a point A on the curve you have drawn; extend dotted lines from this point to the horizontal and vertical axes Mark the initial quantities of the two goods as CDA and JA, respectively Explain why, in the absence of economic growth, an increase in jacket production requires a reduction in the production of CD players Now show how economic growth could lead to an increase in the production of both goods Case in Point: The European Union and the Production Possibilities Curve Figure 2.16 Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 105