ECONOMICS Chapter 2 Section 2 Production Possibilities Frontier

ECONOMICS Chapter 2: Section 2 Production Possibilities Frontier Please complete the Bell Ringer in e. Back. Pack

Bell Ringer

Production Possibilities Curve (Frontier)

Calculate the Table A B C D E Videos 0 1 2 3 4 Hats 30 29 25 15 0 A to D – 15 hats B to C – 14 hats E to D – 1 video C to A – 2 videos ***Remember Opportunity cost is what we’re giving up an so look for the thing that we’re losing…

Production Possibilities Curve › PPC- shows the possible combinations of the two types of goods that can be produced when available resources are employed fully and efficiently › Efficiency- Producing the maximum possible output from available resources

Inefficient and Unattainable Production › When resources are not used fully or used inefficiently they are inside the PPC. › Points placed outside of the curve are deemed unattainable given the resources and technology available.

Movement along the PPC › Movement along the PPC involves giving up some of one good to get more of the other good. › For example with the image. We can either make 200 tons of wheat and 300 tons of Cotton or 160 tons of wheat and 400 tons of cotton when using the same resources.

Increasing Opportunity Cost › Law of Increasing Opportunity Cost- Each additional increment of one good requires the economy to give up successively larger increments of the other good.

Shifts of the PPC › The PPC can grow and shrink if there is a change in technology and/or resources. › Economic Growth- An expansion in the economy’s production possibilities or ability to produce.