Eco 201 Case 1

ECO201 Case Study/Module 1


A reduction in trade barriers will cause a countries production possibilities curve to shift outward.   Reducing trade barriers allows countries’ economies to grow through import and export thus causing their economy to grow stronger.   This economic growth would imply an outward shift in an economy’s production possibilities curve.
The production possibility frontier represents the point at which an economy is most efficiently producing its goods and services and, therefore, allocating its resources in the best way possible. If the economy is not producing the quantities indicated by the production possibility frontier, resources are being managed inefficiently and the production of society will dwindle. The production possibility frontier shows there are limits to production, so an economy, to achieve efficiency, must decide what combination of goods and services can be produced.   This would mean the economy operating inside the production possibilities frontier is a weak economy.
The two primary methods of achieving economic growth are increasing the quantity and quality of resources. Each method expands the economy's production capabilities, which can result in a greater quantity of production that can then lessen the fundamental problem of scarcity. Economic growth is commonly illustrated as an outward shift of the production possibilities curve. The first method of achieving economic growth is to increase the quantities of available resources such as labor, capital, and natural resources.   A direct implication of scarcity is that limited resources mean limited production of goods and services. If those resources are less limited, then production can be greater.   Labor is involved in almost every act of production. As such, if the economy has more workers, then it can produce more goods. The quantity of labor is typically expanded in three ways:
  * The first is natural population growth. Because labor is people, more...