Economics Article

[The Economist]

Well I'm writing an economics article but I'm not sure for a thing so I thought I could use some help. The headline of the article is "Profits from newly discovered gold mine used to purchase vaccines against malaria in Zimbabwe".

Well I know what to write, what economics terms to define and everything. But when I tried to draw the PPF (production possibility curve) I wasn't sure for what to put on the axis.

I've thought of putting on the one axis "purchase of vaccines" and on the other "product x".

Since the country experiences potential growth and there is a shift outwards of the PPF I wouldn't make a parallel PPF but it would look like this :

(ignore the numbers and the points)

I'm not sure if what I'm thinking is write so I would like to have a second opinion!

Thanks

*on the X axis would be product X and on the Y axis the purchase of vaccines

Edited October 10, 2009 by Watermelon

[Chelleee]

hmm

after reading i actually thought that you would put vaccines as consumer goods and some kind of machine involved in gold mines as capital goods.

the reason for this is that on the PPC your doing a trade-off between economic development and growth no?

so basically you'll need a good that will promote economic development (vaccines) and a good that promotes economic growth - which is why i thought of a machine that is used in the gold mines since investment in those machines may result in higher profits due to more gold being found

does that make sense ?

[CaffeineMachine]

Actually, I was thinking as a possibility, that you could draw your PPF with Vaccines on one axis, and Gold production on the other.

Allow me to explain why: This PPF demonstrates the concept of comparative advantage. Zimbabwe can choose either to domestically produce vaccines, or to increase the production of gold domestically, which is then used to trade for malaria vaccines from other nations. Hence, the way you would draw this PPF would be a really low amount of domestic production of vaccines mixed with a very high production of domestic gold. You would then parallel this with the vaccine supplying nation, where there is a lower production of gold, and a higher production of vaccines. By demonstrating that they would both be willing to trade, since their marginal rates of substitution fall inside the ranges for trade to be feasible, you could then state that this would be a more efficient manner of acquiring vaccines for Zimbabwe than by increasing domestic production, at which bundles Zimbabwe ends up sacrificing gold production, which could have equivalently been used to trade for even greater bundles of vaccines.