How can we use the Production Possibilities Frontiers framework to think about and analyze income inequality within a country, such as the USA, rather than across countries

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One Page of thoughts on: How can we use the Production Possibilities Frontiers framework to think about and analyze income inequality within a country, such as the USA, rather than across countries?
Background:
Production Possibilities Frontiers: We can use them to demonstrate the trade offs that an economy (or a business) must make when deciding what to produce. The frontier demonstrates that there is scarcity and the bowed out shape demonstrates the Law of Increasing Opportunity Cost.

One interesting way that Production Possibilities Frontiers (PPF’s) are used is to demonstrate the trade-offs between producing consumer goods and capital goods. Producing more capital goods provides for greater economic growth in the future and thus allows the PPF to shift out faster than if an economy chooses to produce more consumer goods. Then there were would be slower or non-existent economic growth.

Taking this one step further, we can compare the PPF of a richer country to that of a poorer country. The poorer country’s PPF is going to be much closer to the origin than the richer country. Additionally, the richer country, with significantly more available production opportunities, can choose to produce more capital goods thus allowing it to become even richer. (Using the terms “rich” and “poor” in this context refers to the value of its productive capacity) The poor country, with far fewer production opportunities, has to use much more of its resources to provide the basic necessities of life for its citizens thus not enabling it to produce much capital and therefore impeding its ability to grow.

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