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Figure 2.7 Spending More for Security
Here, an economy that can produce two categories of goods,
security and “all other goods and services,” begins at point A on
its production possibilities curve. The economy produces SA units
of security and OA units of all other goods and services per period.
A movement from A to B requires shifting resources out of the
production of all other goods and services and into spending on
security. The increase in spending on security, to SA units of
security per period, has an opportunity cost of reduced production
of all other goods and services. Production of all other goods and
services falls by OA - OBunits per period.
At point A, the economy was producing SA units of security on the vertical
axis—defense services and various forms of police protection—
and OAunits of other goods and services on the horizontal axis. The
decision to devote more resources to security and less to other goods and
services represents the choice we discussed in the chapter introduction. In
this case we have categories of goods rather than specific goods. Thus, the
economy chose to increase spending on security in the effort to defeat
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org
77
