How can this be when the PPF clearly shows that to produce more guns you must produce less butter?.
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Consider the curve below. One of the most common uses of the production possibilities concept in applied economics is the “guns and butter” metaphor. “Guns”
represents all production by the nation that is related to the national defense. “Butter” represents all other production by the nation (consumer goods, capital goods
for business, etc.). The power of the concept here is to show that defense spending doesnt cost money. Rather it costs the value we place on the “butter” we
couldve produced instead.
Lets discuss this. When we invaded Iraq in 2003, we required the production of more guns (meaning less butter), but for several years the typical family felt no
loss of butter whatsoever. If anything, they were able to buy more butter than ever. How can this be when the PPF clearly shows that to produce more guns you
must produce less butter? Is there a way so that “things” can be manipulated so that families dont feel a loss of butter when we engage in war with another
country?
How can this be when the PPF clearly shows that to produce more guns you must produce less butter?
