Production Possibilities Curve, Economic Growth, and Specialization

This presentation provides a comprehensive overview of the Production Possibilities Curve (PPC) and its applications in economics. It begins by introducing fundamental concepts such as scarcity, choice, and opportunity cost, illustrating how these principles shape economic decisions at both individual and societal levels. The presentation then delves into the PPC, explaining how it represents the maximum combinations of goods that can be produced with available resources, given certain assumptions. It explores the concept of economic growth and how it shifts the PPC outward, driven by factors like new technology and increased labor supply. Additionally, the presentation covers specialization, comparative advantage, and the division of labor, demonstrating how these concepts lead to greater productivity and economic efficiency. The 'Guns vs. Butter' analogy is also used to illustrate the trade-offs societies face. The presentation concludes by discussing the trade-off between present and future consumption, and the role of capital goods in economic growth. This presentation provides a solid foundation for understanding core economic principles.

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, energ
and capital
• We must make a choice on what to study, wha
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.

PPC - Studying

The Choices Society Faces (cont'd
• Production possibilities assumptions
▫ Resources are fully employed
▫ Production takes place over a specific
time period
▫ Resources are fixed for the time period
▫ Technology does not change over the
time period

The Choices Society Faces (cont'd
• Efficiency
▫ A point along the line when everyone is employ
and all resources are used correctly.

Production
Possibilities Curve (PPC)
• What would happen to the production
possibilities curve if you spent more
time studying?
▫ Let’s say instead of 12, you had 20 hours to
study
• What would happen to your
potential grades?
• What if the subjects overlapped like Engli
and History or Speech