Belt profit $1.00 each. Shoe profit .50 each. 1. What is scarce in this graph? 2. How many shoes can be produced when 20 thousand belts are made? 3. What could cause production at point B? 4. What is the opportunity cost in terms of belts when 30,000 shoes are made? 5. New machines are invented that increase the speed at which leather can be produced by 20%. Show how this invention would impact the Production Possibility Frontier. 30 25 Belts in thousands 20 15 10 B 5 10 20 30 40 50 60 Shoes in Thousands

SPECIALIZATION:  The focuses on the production of a limited scope of products or services in order to gain greater degrees of productive efficiency

Absolute Advantage Refers to the ability of a party (an individual, or firm, or country) to produce more of a good or service than competitors. To be better at something.

Comparative Advantage Refers to the ability of a person or a country to produce a particular good or service at a lower opportunity cost.