What would be the production possibility frontiers for Brazil and the United States?Both Brazil and the U.S. produce clothing and soda. For Brazil the total cost to produce 100000 units of...

What would be the production possibility frontiers for Brazil and the United States?

Both Brazil and the U.S. produce clothing and soda. For Brazil the total cost to produce 100000 units of clothing per year and 50000 cans of soda is the same. For the U.S. the cost to produce 65,000 units of clothing per year and 250000 cans of soda is the same.

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justaguide | College Teacher | (Level 2) Distinguished Educator

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The production possibility frontier (PPF) gives an idea of the opportunity cost of producing a particular product. If there are two products A and B that can be produced using the same resources, producing more units of A comes with a decrease in the number of units of B that can be produced. Similarly producing more units of B comes with a decrease in the number of units of A that can be produced. The graph drawn with the number of units of A that can be produced on one axis and the number of units of B that can be produced on the other axis is the production possibility frontier. It is possible to produce a number of units that lies below the PPF but that would be an inefficient use of resources available. It is not possible to produce a number of units of both that lies outside the PPF.

In the question both Brazil and the U.S. produce clothing and soda. For Brazil the total cost to produce 100000 units of clothing per year and 50000 cans of soda is the same.

If by cost the resources utilized is implied, we have an opportunity cost for producing a unit of clothing as half a unit of a can of soda. On the other hand the opportunity cost of a can of soda is 2 units of clothing.

Similarly for the U.S. the resources used to produce 65,000 units of clothing per year and 250000 cans of soda is the same. The opportunity cost of a unit of clothing is approximately 3.846 units of cans of soda. The opportunity cost of a can of soda is 0.26 units units of clothing.

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