Editing Budget constraint (section)

=== International economics ===
[[File:Production Possibilities Frontier Curve.svg|thumb|right|Point X is unobtainable given the current "budget" constraints on production.]]

A [[production-possibility frontier]] is a constraint in some ways analogous to a budget constraint, showing limitations on a country's production of multiple goods based on the limitation of available [[factors of production]]. Under [[autarky]] this is also the limitation of consumption by individuals in the country. However, the benefits of [[international trade]] are generally demonstrated through allowance of a shift in the [[consumption-possibility frontier]]s of each trade partner which allows access to a more appealing indifference curve.
In the "toolbox" Hecksher-Ohlin and Krugman models of international trade, the budget constraint of the economy (its CPF) is determined by the terms-of-trade (TOT) as a downward-sloped line with slope equal to those TOTs of the economy. (The TOTs are given by the price ratio Px/Py, where x is the exportable commodity and y is the importable).