2. how did the 1980s arms race contribute to the collapse of the Soviet Union?

Economic Growth

-PPF is expanding all the time to allow this to happen -due to new technology and improvements in how much we can produce

Technological Efficiency

-a necessity but insufficient condition for economic efficiency

PPF Slope

-always negative because there is a trade off -the absolute value of the slope is the marginal opportunity cost of whatever is on horizontal axis, inverse of this is the opportunity cost of vertical axis -slope can curves = increasing costs -slope can be flatter = constant costs

Trade off and opportunity cost

-as trade offs keep getting worse, opportunity cost is getting higher and higher

Economic Efficiency

-can be a specific point on PPF -all about tastes and preferences

Productions Possibility Frontier (PPF)

-curve showing all the possible combos of output given resources and technological efficiency -technological efficiency and economic efficiency are not the same

Increasing Costs

-every point on the PPF is tech. efficient, but only one point is economically efficient -there are increasing opportunity costs

Economic Freedom

-it is usually the society that has more freedom that wins wars -this is because they have more economic freedom -like in WWII, Pittsburg produces more steel than most of the world alone

Constant Costs

-tradeoff stays the same, it is always the same ratio or goes down the same amount -slope with have one value, opportunity cost is always the same -the steeper the PPF the higher the opportunity cost for the good, the lower the PPF the lower the opportunity cost of the good

Peace Dividend

-when countries can stop producing arms for the war their production of other things can go back up -two countries with the same PPF but different preferences can have a higher peace dividend, a different amount increase of production of more goods -the country with the higher production in the first place, usually has the least change

Answer

-without much background, the US had a higher PPF and was able to up productions of guns and arms without a huge lose in the production of all other goods. But in order to keep up the USSR had to drastically up their supply of arms too even though they had a lower PPF, which means there was a greater loss in the production of food and all other goods. They had to pay a higher opportunity cost, and people protested and then the Soviet Union collapsed. -you can either devote your resources to national defense or all other forms of consumers goods