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How the production of public goods will be enhanced

Plot a production possibilities curve along with public goods on the vertical axis and private goods on the horizontal axis. Supposing the economy is initially operating on the curve, denote how the production of public goods might be enhanced. How might the output of public goods be enhanced if the economy is initially operating at a point inside the curve?

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On the curve, the only way to get more public goods is to decrease the production of private goods (from C to B). An economy operating within the curve can expand the production of public goods without sacrificing private goods (say, from A to B) by making employ of unemployed resources.

 

2381_Private goods -public goods.png

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