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by Steven Suranovic ©1997-2004

Trade 40-5a  

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To verify that a point is on the PPF we can simply plug the quantities into the PPF equation to see if it is satisfied. The PPF formula is . If we plug in the exogenous variables for the US into the formula we get . Plugging in the production point above yields, and since 16 + 8 equals 24 the production point must lie on the PPF.


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International Trade Theory and Policy Lecture Notes:
©1997-2004 Steven M. Suranovic
Last Updated on 8/20/03