Answer
a. Production possibility frontier (PPF) or Production possibility Curve (PPC) demonstrates the cost of producing one good against another.
At efficiency, a movement along the curve measures how many of one good must be sacrificed to make another.
This is the reason why the curve is bowed outward because as a country makes more of a good it becomes more difficult to increase production.
b. Any point in the shaded area that isn’t along the outer curve is possible but inefficient.
Any point that is not within the shaded area or outside the area requires more resources than are available and are thus impossible to achieve.
c. Doves would prefer a point that produces much more butter than guns because they value peace.
Whereas, on the other hand, the Hawks would choose a point where more guns are being produced because they value security.
d. The reduction in the need for guns would provide a larger “peace dividend” to the hawks because of the steepness of the production frontier.
For each gun that the hawks would stop making they would be able to make a greater amount of butter than the doves would be able to while forfeiting the same amount of guns.
Work Step by Step
The graph is also given below :
