The production possibility frontier (PPF) is a curve depicting all maximum output possibilities for two goods, given a set of inputs consisting of resources and other factors. When predicting the production possibility frontiers for Brazil and United States the following factors such as labor, capital and technology, among others, will affect the resources available, which will dictate where the production possibility frontier lies. The production possibility frontier is also known as the production possibility curve or the transformation curve would be as follows. The two countries form a synergetic alliance where Brazil exclusively produces clothes while United States exclusively produces soda, with open market between the two of them for the clothes and soda. I would front this kind of Possibility frontiers because both the countries produce more of one commodity that the other. United States for example produces more soda than it consumes while Brazil consumes more soda than it produces.
The production possibility frontier (PPF) drives home the idea that opportunity costs normally come up when an economic organization with limited resources must decide between two alternatives. The PPF is depicted graphically as an arc, with one commodity on the X axis and the other commodity on the Y access. At each point on the arc, there is an efficient number of the two commodities that can be produced with available resources. Therefore, it 's up to the organization to look at the PPF and decide what number of each commodity should be produced to maximize the overall benefit to the economy.
If, for example, a government organization is deciding between the production mix of soda and clothes, and it ca...
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...duce a single extra unit (or marginal unit) of another good, assuming that both goods require the same scarce inputs.
In general, a capital-abundant country (such as the United States) tends to specialize in capital-intensive industry and export capital-intensive products. A country is capital abundant if its endowment of capital is large compared to other countries.
Where demand conditions are different between Brazil and US and sufficiently oriented toward the product using relatively intensively the physically relatively abundant factor in at least one country, the relative autarky prices will be just opposite to what H-O would predict. Trade of this nature would help Brazil to a very great extent. This is because Brazil will be exploiting American vast and rich market and skilled manpower, at the same time-saving capital and human resources on production soda.
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