Production Possibility Frontiers of Health Care and Education - Assignment Example

The paper "Production Possibility Frontiers of Health Care and Education" is a worthy example of an assignment on macro and microeconomics. From the graph: (a) When a country uses all of its resources on health care, 15 units of health care will be produced with zero units of education.(b) When a country uses all its resources on education, 24 units of education will be produced with zero units of health care.(c) The opportunity cost for producing 5 more units of education from 16 units is equal to 4 units of health care that must be given up.

Therefore health care reduces from 11 units to 7 units.Health care and education are both necessary services in an economy that can be produced with a given combination of scarce resources. The production possibility frontier (PPF) is normally concave to the origin. This is an indication that the output in health or education as a result of an increase in the allocation of factors of production to either of the services may fall. When we move down the PPF, more productive factors will be allocated to education, however, the marginal output in education gets smaller as more and more resources are added (Samuelson 2002).

Such a distribution will lead to a reduction in the level of health care that can be produced as more and more resources will be shifting to the production of education and less of it for the production of health care. PPF indicates the various combinations of health care and education that can be produced using all the present factor resources efficiently. Shifting of productive resources from education to health care must be followed by giving up some units of education at the expense of health care, a principle known as the diminishing returns.

This occurs because not all factor inputs are suitable in the same measure to producing health care and education. Any point inside the PPF is an indication that the productive resources are not efficiently combined and therefore there is an underproduction of both services. It occurs when there are unemployed productive resources in the production process. Any point along the curve is the efficient distribution of productive resources for the production of both services (Bator 2004).Any point above the PPF is not attainable with the current level of productive resources.

For a level of distribution to be attainable, an economy will require an increase in the productive resources for health and education, increase in productivity in health care and education and or an improvement in the technology for both health care and education. When these factors are achieved, then an efficient distribution of the services will be attainable in the economy. The distri0bution of more of these services will result in economic welfare provided the consumers are deriving a positive satisfaction from health care and education.

This is possible through an improvement in the allocative efficiency of productive resources. The reallocation of scarce factors of production from healthcare to education involves an opportunity cost. An increase in educational distribution by 5 units results in the reduction of health by 4 units from 11 units to 7 units. As a result, the opportunity cost of shifting resources in production always increases due to the shape of the PPF.In conclusion, the PPF provides an efficient means of product distribution when the allocative efficiency of factors of production is achieved.

Shifts in the distribution of products in the PPF occur when; there are improvements in productivity and efficiency as a function of technological advancement; more productive resources are employed due to the rise in the amount of capital equipment available (Martin 2002).