comparative advantage in producing radios, so, if the firm goes from producing 150 calculators and no radios to producing 100 radios, it will produce them at Plant S In the production possibilities curve for both plants, the firm would be at M, producing 100 calculators at Plant R Figure 2.11 2.3 Applications of the Production Possibilities Model LEARNING OBJECTIVES Understand the argument for unrestricted international trade in terms of economic specialization and comparative advantage Define economic growth in terms of the production possibilities model and discuss factors that make such growth possible Explain the classification of economic systems, the role of government in different economic systems, and the strengths and weaknesses of different systems The production possibilities curve gives us a model of an economy The model provides powerful insights about the real world, insights that help us to answer some important questions: How does trade between two Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 87