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    Production Possibilities Curve

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    界洋美語
    The document discusses production possibility curves and opportunity cost. It provides examples of a pizzeria owner's opportunity cost for different production choices. It then defines key economic terms and covers the characteristics and construction of production possibility curves.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Production Possibilities Curve

    Uploaded by

    界洋美語
    2 views15 pages
    The document discusses production possibility curves and opportunity cost. It provides examples of a pizzeria owner's opportunity cost for different production choices. It then defines key economic terms and covers the characteristics and construction of production possibility curves.

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    © © All Rights Reserved

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    The document discusses production possibility curves and opportunity cost. It provides examples of a pizzeria owner's opportunity cost for different production choices. It then defines key economic terms and covers the characteristics and construction of production possibility curves.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    2 views15 pages

    Production Possibilities Curve

    Uploaded by

    界洋美語
    The document discusses production possibility curves and opportunity cost. It provides examples of a pizzeria owner's opportunity cost for different production choices. It then defines key economic terms and covers the characteristics and construction of production possibility curves.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 15

    Bellringer

     Review HW with your partner

     You own a pizzeria. You have one oven in your kitchen.


    You can either make 2 pizzas or 4 calzones at one time.
    What is your opportunity cost if you make:
     2 pizzas?
     1 pizza?
     4 calzones?
    Agenda
     Bellringer/Review HW
     Review Questions…..
     Notes: Production Possibility Curves
    Review
     What is scarcity?
     Limited resources for unlimited wants
     What are the factors of production?
     Land, labor, capital, entrepreneur
     What are the three types of capital?
     Physical, human, financial
     What is the difference between a trade off and an
    opportunity cost?
     Trade off: decision; Opportunity cost: what is given up
    Production Possibilities Curve
    Connecting dots….
    All resources are scarce

    An economist studies
    the issue of scarcity

    Because everything is scarce, you can’t


    have everything. You must give stuff up
    (opportunity cost and trade off)

    Production possibilities curve helps you to determine the


    perfect balance between giving up and producing….
    Production possibilities curve
    Gallons of Blocks of
    Milk Cheese
    9 0

    7 1

    6 3

    5 5

    3 6

    0 7
    How does the curve show opportunity
    cost?

    Opportunity Cost

    Milk
    Maximum efficiency!
    Be on the curve!

    Cheese
    The Curve…

    Opportunity Cost

    Milk
    Underutilization (inefficiency):
    Using too few resources. Results in
    layoffs, recessions, misuse of
    natural resources, etc…

    Cheese
    The Curve…

    Opportunity Cost

    Milk

    NOT POSSIBLE!! Only if new


    technology is introduced or
    new resources are found!

    Cheese
    The Curve…

    Opportunity Cost

    Milk
    Underutilization/
    Inefficiency NOT POSSIBLE!! Only if new
    technology is introduced or
    new resources are found!
    Efficiency

    Cheese
    Economic Growth

    Economic Growth! When the


    curve shows an outward
    movement that means that
    something happened to increase
    your production possibilities
    Milk (ex: new technology or
    resources)

    Cheese
    Economic Decline

    Economic Decline! When the


    curve shows an inward
    movement that means that
    something happened to
    decrease your production
    Milk possibilities (ex: employees on
    strike)

    Cheese
    Practice
     You have started a paper writing business. Write this data
    down and compose a production possibilities curve:
    10 page 5 page
    research research
    Label the following: Both papers papers
    Axis, underutilization, 18 0

    efficiency, and impossibility 15 1

    12 3

    9 9
    Draw the curve again and show
    economic growth (label) and 5 15
    economic decline (label) 3 19

    0 22
    Practice
     On your own, try to answer the questions on the
    “Production Possibilities Frontier Worksheet”

     FYI: Frontier is the same as curve


    Vocab flash cards….
     good,
     service,
     need,
     want,
     producer,
     distributor,
     scarcity,
     shortage,
     opportunity cost,
     trade-off, and
     factors of production.

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