LO4

6543210

02468

1012

DVDs$20

Books$10

$120 Budget 12

10

8

6

4

2

0 2 4 6 8 10 12 14Quantity of Paperback Books

Qua

ntit

y of

DVD

s

Income = $120Pdvd = $20

= 6

Income = $120Pb = $10

= 12

Attainable

Unattainable

1-1©2013 McGraw-Hill Ryerson Ltd. 1 Chapter 1, LO6

Illustrates production choicesAssumptions:

Full employment Fixed resources Fixed technology Two goods

©2013 McGraw-Hill Ryerson Ltd. Chapter 1, LO6 2

LO5

Type of Product

Pizzas (in hundred thousands)

Industrial Robots (in thousands)

Production AlternativesA B C D E

10 9 7 4 0

0 1 2 3 4

Plot the Points to Create the Graph…

1-3©2013 McGraw-Hill Ryerson Ltd. 3 Chapter 1, LO6

LO5

The law of increasing opportunity costs makes the PPC concave.

1-4

Pizzas

Indu

stria

l Rob

ots

Attainable

0 1 2 3 4 5 6 7 8 9

1413121110 9 8 7 6 5 4 3 2 1

Unattainable

A

B

C

D

E

U

©2013 McGraw-Hill Ryerson Ltd. 4Chapter 1, LO6

LO5

a

b

c

d

e

MB = MC

MC

MB

15

10

5

0

1 2 3Quantity of Pizza

Mar

gina

l Ben

efit

& M

argi

nal

Cost

1-5©2013 McGraw-Hill Ryerson Ltd. 5 Chapter 1, LO6

Type of Product

Pizzas (in hundred thousands)

Industrial Robots (in thousands)

Production AlternativesA' B' C' D' E'

14 12 9 5 0

0 2 4 6 8

LO6 1-6©2013 McGraw-Hill Ryerson Ltd. 6Chapter 1, LO7

LO6

Pizzas

Indu

stri

al R

obot

s

Attainable

0 1 2 3 4 5 6 7 8

1413121110 9 8 7 6 5 4 3 2 1

Unattainable

AB

C

D

E

EconomicGrowth

Now Attainable

A’

B’

C’

D’

E’

1-7©2013 McGraw-Hill Ryerson Ltd. 7 Chapter 1, LO7

LO6

Goods for the Present

Good

s for

the

Futu

re

Good

s for

the

Futu

reGoods for the Present

P

F

CurrentCurve

CurrentCurve

FutureCurve

FutureCurve

Presentville

Futureville

1-8©2013 McGraw-Hill Ryerson Ltd. 8 Chapter 1, LO7