food production to computer production Once the shift is made, though, there is no effect on employment in either continent Of course, this idealized example would have all of South America’s computer experts becoming farmers while all of Europe’s farmers become computer geeks! That is a bit much to swallow, but it is merely the result of assuming linear production possibilities curves and complete specialization In the real world, production possibilities curves are concave, and the reallocation of resources required by trade is not nearly as dramatic Still, free trade can require shifts in resources from one activity to another These shifts produce enormous benefits, but they not come without costs Nearly all economists agree that largely unrestricted trade between countries is desirable; restrictions on trade generally force the world to operate inside its production possibilities curve In some cases restrictions on trade could be desirable, but in the main, free trade promotes greater production of goods and services for the world’s people The role of international trade is explored in greater detail in subsequent chapters of this book Economic Growth An increase in the physical quantity or in the quality of factors of production available to an economy or a technological gain will allow the economy to produce more goods and services; it will shift the economy’s production possibilities curve outward The process through which an economy achieves an outward shift in its production possibilities curve is calledeconomic growth An outward shift in a production possibilities Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 91