Over the last 100 years, the PPF has expanded exponentially. The question at hand for the new millennium appears to be how far can the economic envelope be pushed? The cost incurred in economic growth involves two key factors: capital accumulation, the growth of capital resources; and technological progress, new and better methods of producing goods and services. As a result of these factors in the nation’s current economic profile, there are an enormous quantity of trains, planes, and automobiles, producing far more available transportation than was experienced when only horses and buggies were available as transport. Satellites make transcontinental communications possible on a scale much larger than what could have been predicted using cable technology. However, accumulating capital and developing new technology are costly. Economic growth wears a cloak of trade-off. If all resources are devoted to the production of food, clothing, houses, entertainment, and other consumer goods, and none to research, development, and accumulating capital, there will be no more capital and no better technologies in the future than exist at present. Production possibilities in the future will be exactly as they are today. Future economic expansion requires that fewer goods are produced for future consumption. Resources that are freed up today allow for the accumulation of capital. In turn, better technologies for the production of consumption goods can be developed in the future. The cut in output of consumer goods today is the opportunity cost of economic growth. Household Consumer Choices Individuals determine what goods and services they will consume. The total quantity of those desired goods and services is called market demand. The relationship between the quantity of a good or service by a single individual and its price is called individual demand. Market demand is the sum of all individual demands. These demands are better understood by...
