up! WITH A PARTNER, ANSWER THE QUESTIONS BELOW · PDF fileWITH A PARTNER, ANSWER THE QUESTIONS BELOW USING THE PROVIDED.PPC ... INDICATES LOST POTENTIAL OUTPUT ... reducing car production

pair up!WITH A PARTNER, ANSWER THE QUESTIONS

BELOW USING THE PROVIDED.PPC

GREAT BRITAINPRODUCTION POSSIBILITIES FOR

PRIS

ONS

21

18

15

12

9

6

3

00 6 12 18 24 30

SCHOOLS

C

D

E

9 PRISONS

1. The opportunity cost of moving from A to C is…

A

2. The PER UNIT opportunity cost of moving from D to B is…

3. At what point could Britain be producing more, but can’t b/c it is productively inefficient?

4. If homeschooling became popular in Britain, which point is more allocatively efficient: C of D?

B

F1 SCHOOL PER PRISON

POINT F

POINT C

UNIT 1 . 5

PRODUCTIONPOSSIBILITIESCurves

COUNTRY XPRODUCTION POSSIBILITIES FOR

GOOD

A

GOOD B

B

C

D

E

F

A

PRODUCTIONPOSSIBILITIESCurvesKEY ASSUMPTIONS

ONLY 2 GOODS CAN BE PRODUCEDRESOURCES AND TECHNOLOGY ARE FIXED ( )

STEPS TO GRAPHING

LABEL THE AXES PROPERLY

GENERATE A GRAPH FROM THE NUMBERS AND LABEL PROPERLY

CETERIS PARIBUS

USE THE NUMBERS TO EXPLAIN PRODUCTION

GOOD

A

GOOD B


GOOD

A

GOOD B

B

C

D

E

F


A LIMIT TO PRODUCTION W/ WHAT IS AVAILABLE

WHAT DOES A PPC SHOW USSCARCITY

VARIOUS COMBOS OF POTENTIAL OUTPUT

PRODUCTION POSSIBILITIES

THE FORGONE POTENTIAL OUTPUT WHEN PRODUCING DESIRED GOODS

OPPORTUNITY COST

The slope of the PPC will indicate the type of opportunity cost being experienced

A

PRODUCTIONPOSSIBILITIES

A

18SUGAR

B C D E F

17 15 11 6 00 2 4 6 8 10WHEAT

COUNTRY APRODUCTION POSSIBILITIES FOR

1 unit of sugar

2 units of sugar

4 units of sugar

5 units of sugar

6 units of sugar

1. The opportunity cost of moving from A to B is…2. The opportunity cost of moving from B to C is…3. The opportunity cost of moving from C to D is…4. The opportunity cost of moving from D to E is…5. The opportunity cost of moving from E to F is…


A

18SUGAR

B C D E F

17 15 11 6 00 2 4 6 8 10WHEAT

COUNTRY APRODUCTION POSSIBILITIES FOR

1 unit of sugar

2 units of sugar

4 units of sugar

5 units of sugar

6 units of sugar

WHAT’S HAPPENING TO

OPPORTUNITY COSTS AS

PRODUCTION SHIFTS FROM

SUGAR TO WHEAT?


ACOUNTRY APRODUCTION POSSIBILITIES FOR

CurveSU

GAR

19

17

15

13

11

6

00 2 4 6 8 10

WHEAT

B

C

D

E

F

AN

INDICATES

OPPORTUNITY COSTS

PPCOUTWARD BOWING

INCREASING


A

5MILK

B C D E F

4 3 2 1 00 1 2 3 4 5BUTTER

COUNTRY YPRODUCTION POSSIBILITIES FOR

1 unit of MILK 1. The opportunity cost of moving from A to B is…2. The opportunity cost of moving from B to C is…3. The opportunity cost of moving from C to D is…4. The opportunity cost of moving from D to E is…5. The opportunity cost of moving from E to F is…

1 unit of MILK

1 unit of MILK

1 unit of MILK

1 unit of MILK


A

5MILK

B C D E F

4 3 2 1 00 1 2 3 4 5BUTTER


1 unit of MILK

WHAT’S HAPPENING TO

OPPORTUNITY COSTS AS

PRODUCTION SHIFTS FROM

MILK TO BUTTER?

1 unit of MILK

1 unit of MILK

1 unit of MILK

1 unit of MILK

PRODUCTIONPOSSIBILITIESA


CurveM

ILK

5

4

3

2

1

00 1 2 3 4 5

BUTTER

B

C

D

E

F

AN

INDICATES

OPPORTUNITY COSTS

PPCSTRAIGHT

CONSTANT


GOOD

A

GOOD B

B

C

D

E

F


ANY POINT ON THE CURVE INDICATES EFFICIENT USE OF INPUTS

WHAT DOES A PPC SHOW USPRODUCTIVE EFFICIENCY

ANY POINT INSIDE THE CURVE INDICATES LOST POTENTIAL OUTPUT DUE TO INPUT UNDER-UTILIZATION

PRODUCTIVE INEFFICIENCY

ANY POINT OUTSIDE THE CURVE INDICATES FUTURE POTENTIAL OUTPUT

ROOM FOR GROWTH

To reach it, the PPC must shift outward!

A

G


COUNTRY MPRODUCTION POSSIBILITIES FOR

CurveGO

OD X

GOOD Y

A

B

SHIFTI

NG

3 determinants

RESOURCE QUANTITY/QUALITY

TECHNOLOGY

CHANGE IN

TRADE

CHANGE IN

CHANGE IN

THE



CurveGO

OD X

GOOD Y

A

B

SHIFTI

NG


TECHNOLOGY

INCREASE IN

TRADE

ADVANCE IN

INCREASE IN

THE

A PPC

INDICATES

SHIFTING OUTWARD

ECONOMIC GROWTH

A2

B2



CurveGO

OD X

GOOD Y

A

B

SHIFTI

NG


TECHNOLOGY

DECREASE IN

TRADE

SETBACK IN

DECREASE IN

THE

A PPC

INDICATES

SHIFTING INWARD

ECONOMIC CONTRACTION

B2

A2

SCENARIO

A massive storm in the North Atlantic Ocean destroys 75%

of Scotland’s oil rigs

RESULT: ______________________PPC SHIFTS INWARD

DETERMINANT:

_____________________________DECREASE IN RESOURCE QUANTITY

PRODUCTIONPOSSIBILITIESCurve

SCOTALNDPRODUCTION POSSIBILITIES FOR

GOOD

X

GOOD Y

A

BC

SCENARIO

Chinese engineers develop the new Assembly Line 2.0, doubling the productivity of

Chinese workers

RESULT: ______________________PPC SHIFTS OUTWARD

DETERMINANT:

_____________________________INCREASE IN TECHNOLOGY

PRODUCTIONPOSSIBILITIESCurveCurve

CHINAPRODUCTION POSSIBILITIES FOR

GOOD

X

GOOD Y

A

BC

SCENARIO

Italy hires American workers to come make cars in their

factories, reducing car production time by 33%

RESULT: ______________________

PPC SHIFTS OUTWARD (CARS)

DETERMINANT:

_____________________________INCREASE IN RESOURCE QUALITY


ITALYPRODUCTION POSSIBILITIES FOR

CARS

MOTORCYCLES

A

BC

SCENARIO

A new coffee craze causes demand for coffee beans in

Brazil to skyrocket

RESULT: ______________________MOVEMENT FROM B TO A

DETERMINANT:

_____________________________NONE (CHANGE IN SOCIAL NEED)


BRAZILPRODUCTION POSSIBILITIES FOR

COFF

EE

BANANAS

A

BC

SCENARIO

The President signs a bill making community college tuition-free, causing many

workers to take classes to attain new skills

RESULT: ______________________

DETERMINANT:

_____________________________


UNITED STATESPRODUCTION POSSIBILITIES FOR

GOOD

X

GOOD Y

A

BC PPC SHIFTS OUTWARD

INCREASE IN RESOURCE QUALITY

SCENARIO

A crash of the Mexican stock market causes firms to

terminate millions of workers

RESULT: ______________________MOVEMENT TO POINT C

DETERMINANT:

_____________________________NONE (PRODUCTIVE INEFFICIENCY)


MEXICOPRODUCTION POSSIBILITIES FOR

GOOD

X

GOOD Y

A

BC

SCENARIO

The world enacts an embargo on Iraq after its illegal

invasion of Kuwait

RESULT: ______________________PPC SHIFTS INWARD

DETERMINANT:

_____________________________DECREASE IN TRADE


IRAQPRODUCTION POSSIBILITIES FOR

GOOD

X

GOOD Y

A

BC

Documents

up! WITH A PARTNER, ANSWER THE QUESTIONS BELOW · PDF fileWITH A PARTNER, ANSWER THE QUESTIONS BELOW USING THE PROVIDED.PPC ... INDICATES LOST POTENTIAL OUTPUT ... reducing car production