Lets build a Production Possibility Curve Draw the

Let’s build a Production Possibility Curve

Draw the horizontal and vertical axis of the graph. The two items being produced are high heels and sneakers. Label the graph horizontal axis sneakers and the vertical axis high heals.

High Heels Draw the horizontal and vertical axis of the graph. The two items being produced are high heels and sneakers. Label the graph horizontal axis sneakers and the vertical axis high heals. Sneakers

High Heels Draw a production possibilities curve that indicates a CONSTANT opportunity cost. Sneakers

High Heels Draw a production possibilities curve that indicates a CONSTANT opportunity cost. Sneakers

High Heels Put a dot on the graph in a location that indicates the economy is operating efficiently and using all of its available resources. Label it A. Sneakers

High Heels Put a dot on the graph in a location that indicates the economy is operating efficiently and using all of its available resources. Label it A. A Sneakers

High Heels Put a point on the graph that represents inefficient production. In this situation not all resources are being used. Label it B. A Sneakers

High Heels Put a point on the graph that represents inefficient production. In this situation not all resources are being used. Label it B. A B Sneakers

High Heels Add a point to the graph that represents an unobtainable level of production. Label it C. A B Sneakers

High Heels Add a point to the graph that represents an unobtainable level of production. Label it C. A C B Sneakers

High Heels Shift the PPC to show what would happen if new technology were discovered that enabled the production of more shoes. Draw arrows to indicate the direction of the shift A C B Sneakers

High Heels Shift the PPC to show what would happen if new technology were discovered that enabled the production of more shoes. Draw arrows to indicate the direction of the shift A C B Sneakers

Draw the horizontal and vertical axis of another production possibilities curve. This time our two outputs are airplanes and pillows. Label the horizontal axis airplanes and the vertical axis pillows.

Pillows Draw the horizontal and vertical axis of another production possibilities curve. This time our two outputs are airplanes and pillows. Label the horizontal axis airplanes and the vertical axis pillows. Airplanes

Pillows Draw a production possibilities curve shaped in a way that illustrates the law of increasing opportunity cost. Airplanes

Pillows Draw a production possibilities curve shaped in a way that illustrates the law of increasing opportunity cost. Airplanes

Pillows Put a point on the curve that indicates that all resources are being used to produce airplanes and no pillows are being produced. Label the point A. Airplanes

Pillows Put a point on the curve that indicates that all resources are being used to produce airplanes and no pillows are being produced. Label the point A. A Airplanes

Pillows Put a point on the curve that indicates that all resources are being used to produce pillows and no airplanes are being produced. Label it B. A Airplanes

Pillows Put a point on the curve that indicates that all resources are being used to produce pillows and no airplanes are being produced. Label it B. B A Airplanes

Pillows Suppose there is the discovery of a goose down substitute that makes it cheaper to produce high quality pillows. The discovery has no effect on airplane production. Shift the curve in a way that shows the effect of this new discovery. B A Airplanes

Pillows Suppose is the discovery of a goose down substitute that makes it cheaper to produce high quality pillows. The discovery has no effect on airplane production. Shift the curve in a way that shows the effect of this new discovery. Add arrows to indicate the direction of the shift. B A Airplanes