Your Questions About Disadvantage Of Ppf

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David asks…

If each country were to rduce production of its comparative disadvantage good by 1 unit, ?

world output of wine would rise by?
a. 1.5 unit
b. 3 units
c. 2 units
d. 3.5 units

Justin answers:

A. 1.5 unit

(but it sort of best-fit guess – without empirical research)
It should be more than one for sure, but I don’t believe that countries are so inefficient that it would rise productivity twice.
If in reality we are so far from optimal point on PPC/PPF, then it really huge waste of resources away from it’s best use.
1.5 estimate in this case means that total efficiency would rice for +50%, while 2.0 would mean that potential is +100% or it can be doubled.
If we consider US against 50% poorest rest of the world, then output really can rise twice more for this 50% meaning that on average there could be not triple but +50% for the whole world, for instance:

Initial condition:
Developed countires (50%) output: 2
Underdeveloped countires (50%) output: 1
Total: 3, Average: 1.5

More comparative advantage engaged:
Developed countires (50%) output increased a bit: 2.5
Underdeveloped countires (50%) output doubled: 2
Total: 4.5, Average: 2.25
Increase 2.25/1.5=1.5 = +50%

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