Production Possibilities Curve

Production Possibilities Curve
Economic Growth and Production
The greatest powerpoint about
production possibilities ever.

We are in a mixed market
economy
• Therefore, we have to make choices
• We must choose how to spend our time, energy,
and capital
• We must make a choice on what to study, what
to eat, when to work
▫ Economics or Calculus
▫ Expensive Food or Cheap Food
▫ Friday night party or Friday night working

Scarcity, Choice,
and Opportunity Cost
• Opportunity Cost
▫ The highest-valued, next-best alternative that
must be sacrificed to obtain something or to
satisfy a want

Scarcity, Choice,
and Opportunity Cost (cont'd)
• Questions
▫ What is the opportunity cost of attending this
economics class?
▫ What is the opportunity cost of attending a
concert by your favorite band?
▫ What is the opportunity cost of increasing
research for an AIDS vaccine?

Scarcity, Choice,
and Opportunity Cost (cont'd)
• In economics, cost is always
a forgone opportunity.

Limited Resources & Unlimited Wants
Scarcity
Choices
Opportunity Cost
Scarcity, Choice,
and Opportunity Cost (cont'd)

Scarcity, Choice, and Opportunity Cost
• Opportunity cost
and a national monument
▫ Allocating land between public and
private use
▫ The trade-off between the use of
land for recreation or for coal
• Question
▫ What does the market value of coal
under the National Monument tell
us about the perceived social value
of the monument?

How to represent opportunity cost?
• The production
possibilities curve
(PPC) represents all
possible maximum
combinations of total
output that could
be produced.