Does a country have to choose between having guns or butter?
The nation will have to decide which balance of guns versus butter best fulfills its needs, with its choice being partly influenced by the military spending and military stance of potential opponents.
What is the Guns or Butter decision that government must make?
Guns and butter generally refers to the dynamics involved in a federal government’s allocations to defense versus social programs when deciding on a budget. Both areas can be critically important to a nation’s economy.
How do economics use the phrase guns or butter?
Economists use the phrase “guns or butter” to describe the fact that –(a) a person can spend extra money either on sports equipment or food. –(b) a person must decide whether to manufacture guns or butter.
Does butter mean money?
Definitions include: a person being used in a relationship sense for money or what they can do for the user.
Can this economy produce 11 units of guns and 11 units of butter?
Can this economy produce 11 units of guns and 11 units of butter? Explain. No, because they don’t have enough time to efficiently produce both resources in their given amount of time.
How was guns and butter created?
The guns-and-butter curve is the classic economic example of the production possibility curve, which demonstrates the idea of opportunity cost. As an economy produces more guns (military spending) it must reduce its production of butter (food), and vice versa.
Is butter is a consumer good?
if butter uses by a consumer who consumes it, it is final good. if butter is used to make other good, then it will be called intermediate good. A good is said to be final good or intermediate good, it always depends upon the use of it. The goods which are used either for final consumption or for capital formation.
Why it most likely has a bowed out shape?
It is bowed out because the opportunity cost of butter depends on how much butter and how many guns the economy is producing.
Why PPF most likely has a bowed out shape?
A production possibilities curve shows the combinations of two goods an economy is capable of producing. The downward slope of the production possibilities curve is an implication of scarcity. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage.
What does it mean if the PPF curve is a straight line?
If the shape of the PPF curve is a straight-line, the opportunity cost is constant as production of different goods is changing. But, opportunity cost usually will vary depending on the start and end points.
What will be the shape of PPC when?
Therefore, if marginal opportunity cost remains constant then Production possibility curve will be a straight line owing to constant slope of the line.
What is the slope of PPC What does it show?
Slope of PPC shows the ratio between the loss of output and gain of output. The slope of production possibility curve is the marginal opportunity cost which refers to the additional sacrifice that an economy makes when it shifts resources and technology from production of one commodity to the other.