Production Possibility Frontier

Two important questions asked when it comes to international trade are why do countries trade, and how do they analyze individual situations? To define the cost of production, opportunity, and some inputs of production and tariff. The gross domestic product indicates the size of the economy based on dollar value of goods and services. The economic growth can occur when there’s an increase in output over a certain amount of time or how much an economy can produce after using up all their resources.

; resources such as production and consumption.

The production possibility frontier is an effective economical tool that demonstrates how society consumes goods and services. If the PPF society that produces 2 goods, how the goods are used and while utilizing labor resources.

We see this everyday a country is considered labor-intensive when the costs of labor are higher than the material used to make the product. Examples: Would include your hospitality institutions which include hotels and restaurants.

But there are some issues with inflation, as it continues to rise the employers expect an increase in wages for their work towards keeping the business profits coming in (Economy watch, 2010).

There are some advantages of those business that produce labor intensive goods and they include:

  • Staff members can be flexible when it comes to meeting consumers demand.
  • Can offer a personal touch and can apply that to the consumer’s needs.
  • Using labor intensive gives consumers the ability to share their experience, but on the downside:
  • It can be more expensive and may increase the cost of the product because of inadequate production.

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  • Not always effective and could lead to inconsistencies because of workers poor work ethics.
  • Staff members aren’t always focused because of personal issues outside of the business (Amir, 2016).

What is the Marginal Rate of Transformation impact?

The marginal transformation impact can be referred to as the opportunity costs. Meaning that according to theories marginal rate of transformation one good must be sacrificed to produce an extra unit or (marginal cost). The formula used is MRT x/y =dx/dy. Applying this to the PPF illustrates the output produced of two goods using the same resource. (Investopedia, 2018).

What is the labor-abundant country?

Poverty has been an ongoing issue most people feel as though the rich keep getting richer while watching those who are less fortunate struggle just to survive. To make money you must spend money. Oil, refining, and manufacturing are all examples of producing capital-intensive goods. Capital is the expenses of what items are needed to operate. There are several advantages which are:

  • Some find that there are less errors.
  • Able to increase output
  • Eliminates inadequacies with staff. (Amir, 2016).yet it too, has its flaws which include the following:
  • Raises the costs of the investments.
  • Lacking the ability to adapt to changes
  • Lacking initiative (Amir, 2016).

Could trade help reduce poverty in Brazil and other developing countries?

There are millions of people that still live in rural poverty, fragility and conflict, informally, and gender. According to World Bank trade is an important factor that involved through international trade and in some trade has lowered the unemployment rates and increased production. (World Bank, 2018).

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Production Possibility Frontier. (2022, Apr 14). Retrieved from

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