another—like from education to health services—there were increasing opportunity costs. In the examples in this

chapter, we draw the PPFs as straight lines, which means that opportunity costs are constant. When we transfer a

marginal unit of labor away from growing corn and toward producing oil, the decline in the quantity of corn and the

increase in the quantity of oil is always the same. In reality this is possible only if the contribution of additional

workers to output did not change as the scale of production changed. The linear production possibilities frontier is a

less realistic model, but a straight line simplifies calculations. It also illustrates economic themes like absolute and

comparative advantage just as clearly.

Gains from Trade

Consider the trading positions of the United States and Saudi Arabia after they have specialized and traded.
Before trade, Saudi Arabia produces/consumes 60 barrels of oil and 10 bushels of corn. The United States
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