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Production Possibilities Curves
Production Possibilities Curves DAY 3
The production possibilities frontier is a graph that shows the combinations of output that
the economy can possibly produce given the available factors of production and the
available production technology.
Its purpose is to simplify and help explain our economy.
Figure 2 The Production Possibilities Frontier
Copyright©2003 Southwestern/Thomson Learning
Productionpossibilitiesfrontier
A
B
C
Quantity ofCars Produced
2,200
600
1,000
3000 700
2,000
3,000
1,000
Quantity ofComputers
Produced
D
Our Model: The Production Possibilities Frontier
Concepts Illustrated by the Production Possibilities Frontier EfficiencyTradeoffsOpportunity CostEconomic Growth
Figure 3 A Shift in the Production Possibilities Frontier
Copyright © 2004 South-Western
E
Quantity ofCars Produced
2,000
700
2,100
7500
4,000
3,000
1,000
Quantity ofComputers
Produced
A
Table 1 The Production Opportunities of the Farmer and Rancher
Copyright © 2004 South-Western
Figure 1 The Production Possibilities Curve
Potatoes (ounces)
4
16
8
32
A
0
Meat (ounces)
(a) The Farmer’s Production Possibilities Frontier
If there is no trade, the farmer chooses this production and consumption.
Copyright©2003 Southwestern/Thomson Learning
Figure 1 The Production Possibilities Curve
Copyright©2003 Southwestern/Thomson Learning
Potatoes (ounces)
12
24
B
0
Meat (ounces)
(b) The Rancher’s Production Possibilities Frontier
48
24
If there is no trade, the rancher chooses this production and consumption.
