The Possibilities Frontier

15 Mar

As I was writing the “About Me” page, quite a few thoughts came spinning into my head.  More so than really fit in that particular page.  One thing in particular seemed to warrant its own post, so here I go!

I’m currently in a Macroeconomics class, which is several steps backward from the classes I’ve been taking, but it’s one of the few standing in the way of my receiving a Minor in Business.  I’ve been used to taking classes in the 400 level, and now I’m returning to the 200 level, which is the equivalent of the proverbial “[insert class here] 101” they joke about.  It’s introductory information.  This means that we spend an entire class period discussing a topic that I understand fully from the minute it’s introduced.

And I love it.

Now, I’m normally not the type of person who enjoys sitting in a class hearing repetitive information about something I already understand.  I don’t get that feeling from this class, however.  Once the topic is introduced, and the calculations are being derived, I get to sit back and consider the deeper implications.  One of these concepts is the Production Possibilities Frontier.

The Concept is this: You have a certain amount of resources.  This is raw materials like wood, metal, glass, etc., as well as machines, labor, land acreage, etc.  There are only so many people in the world who can only do so much.  So this means that you can either make Product X or Product Y, or some combination of the two.  In the graph above, the arc represents every potential combination of X and Y that’s possible with your given resources.  At point A, you’re making more Y than X; at point B, you’re making more X than Y.

At point C, you’re no longer on that line, you’re beneath it.  That means that there are resources that are available that are not being used to their fullest capacity.  In the economy as a whole, this is the point we will always be at because some amount of unemployment is inevitable.  As long as there are people not working, we cannot claim that we are using every resource to the fullest.

Point D is unattainable.  Once all of your resources are fully utilized, you cannot simultaneously make more of X and more of Y.  You must give up some of one for another.  However, if new technology becomes available, or you learn to use resources differently, it may be possible to move the ENTIRE CURVE so that D is now a part of it.

So what are the implications?  First of all, where are you on the graph?  Are you using all your time, money, and energy, efficiently, to the point where you are satisfied with life?  Are you not employing yourself to the fullest, and feeling that deficiency?  Are you trying to do WAY too much at all times and running yourself ragged?

Second, what is your X and Y?  Is it Happiness?  Success?  Friends?  Family?  What is the underlying battle you go through with the most decisions?  What are you choosing between the most?  Draw a curve of your own, and find out where you currently sit and where you’d like to sit.  (Ideally, you want to be right on the curve somewhere, or at least moving toward it.)  Where on the curve do you want to be?  Closer to this or that?  Right in the middle?

And finally, what would it take for you to move there?  If you’re at point C, there’s something missing that you need to take care of.  You need to use your resources better.  You need a supplement.  If you’re at point D, you’re doing too much and you need to give some of it up.  Doing too much that’s unimportant means that you have less and less to give to those things that are truly important.  Sort your priorities, and ratchet down the amount of resources you’re giving to the things nearer to the bottom.

If you’re at points A or B, figure out if that’s the ideal mix for you.  If it isn’t, realize that you can only move closer to one by giving up more of the other.  You can’t have more hours in a day, you can only use them better.  Decide what “better” means to you, and don’t let anyone tell you otherwise.

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Posted by on March 15, 2011 in Thoughts, Time Management


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