Thanks Colin
However the reason that the PPF bows out is the Law of Increasing costs and
this seems entirely reasonable. And that surely works in time periods of
quite a few years - populations increase slowly not overnight, land barely
at all and capital slowly.
Otherwise, would I be right in suggesting the PPF is convex? Surely not.
Must we draw supply curves with unwritten assumptions that we are in some
indeterminate medium period?
Actual research, I understand, says that costs donšt increase for firms i.e.
There are no diseconomies of scale, (but we won't let reality get in the way
of theory here) and that seems a short term argument or a long term argument
depending how you want to define those terms.
With the demand curve there were similar problems with Marshall's
explanation until Hicks elegantly sorted out income and substitution. I was
hoping some other giant of economics had a similarly elegant solution for
supply.
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