- What Is Consumed and by Whom?
Economists seek to understand what determines the distribution of a
nation’s total output among its people. Who gets a lot, who gets a little,
and why? Should governments care about this distribution of
consumption and, if so, what tools do they have to alter it?
If production takes place on the country’s production possibilities
boundary, then how about consumption? Will the economy consume
exactly the same goods that it produces? Or will the country’s ability to
trade with other countries permit the economy to consume a different
combination of goods?
- Why Are Resources Sometimes Idle?
Sometimes large numbers of workers are unemployed. At the same time,
the managers and owners of businesses and factories could choose to
produce more goods and services. For some reason, however, these
resources—land, labour, and capital—lie idle. Thus, in terms of Figure
2 , the economy sometimes operates inside its production possibilities
boundary.
Why are resources sometimes idle? Should governments worry about
such idle resources, or is there some reason to believe that such
occasional idleness is necessary for a well-functioning economy?
- Is Productive Capacity Growing?