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Do No Harm $/2$

Specialization and production possibilities

Suppose the Netherlands produces only pressure cookers and air fryers. The resources that are used in the production of these two goods are not specialized $-$ that is$,$ the same set of resources is equally effective at producing both air fryers and pressure cookers.

The shape of the Netherlands's production possibilities frontier $($PPF$)$ should reflect the fact that as the Netherlands produces more air fryers and fewer pressure cookers, the opportunity cost of producing each additional air fryer decreases grad.

The following graphs show two possible PPFs for the Netherlands's economy: a straight$-$line PPF $(PP{F}_1)$ and a bowed$-$out PPF $(PP{F}_2).$

Graph $1$

Graph $2$