we asked richard gill if this is typical. the textile-industry situation is indeed typical of economic problems. the first small expenditures for worker protection were able to produce large improvements in worker health. to improve health still further required quite massive expenditures. the further we go in one economic direction, the higher the costs. you may have wondered why i've drawn the production possibilities curve with a bowed-out shape. this shape expresses the principle i've just mentioned. the more of one economic good you produce, the more it usually costs in terms of some other economic good you must give up. our goods are cotton textiles and worker health. the more we divert our resources from producing textiles to producing protection devices, the healthier our workers. we'll move along the curve in this direction. but notice the difference between the moves from a to b and from b to c. we get the same improvement in worker health. these lines are equal. at the beginning, we get this improvement with a smal

we asked richard gill. of the most interesting things about markets is that they can produce the unexpected. they can stimulate innovations. the introduction of minimills in the steel industry was such an unexpected innovation. the supply and demand curves for our steel industry in the 1970s looked like this. because of foreign competition demand was low. we have illustrated this by placing our demand curve far to the left. the price of steel was here, the quantity produced, here. why didn't the domestic steel industry simply lower its prices? as we know from the levittown story the quantity of a product demanded usually increases at lower prices. the answer is, they couldn't expand because of costs. usually, as you expand production your costs go up. this is why we have drawn the supply curve for steel sloping upward towards the northeast. it isn't generally possible for businesses to supply more of a product unless they can get a higher price or they lower costs. this is where the minimills came in. the m

we asked richard gill. of the most interesting things about markets is that they can produce the unexpected. they can stimulate innovations. the introduction of minimills in the steel industry was such an unexpected innovation. the supply and demand curves for our steel industry in the 1970s looked like this. because of foreign competition, demand was low. we have illustrated this by placing our demand curve far to the left. the price of steel was here, the quantity produced, here. why didn't the domestic steel industry simply lower its prices? as we know from the levittown story, the quantity of a product demanded usually increases at lower prices. the answer is, they couldn't expand because of costs. usually, as you expand production, your costs go up. this is why we have drawn the supply curve for steel sloping upward towards the northeast. it isn't generally possible for businesses to supply more of a product unless they can get a higher price or they lower costs. this is where the minimills came in. th