Essentials of Economics 7th Edition by Gregory Mankiw

Exercise 8

The first principle of economics discussed in Chapter 1 is that people face trade-offs. Use a production possibilities frontier to illustrate society's trade-off between two "goods"-a clean environment and the quantity of industrial out-put. What do you suppose determines the shape and position of the frontier? Show what happens to the frontier if engineer's develop a new way of producing electricity that emits fewer pollutants.