PPT-Resources and Production Possibilities Model

Chapter 1 Section 3 Mr Henry AP Economics How a society decides what to produce using their limited resources because a society cannot have everything How a society determines how to produce an item whether using people or machines or both. Analyzing Production Possibilities. Section 3 Objectives, pp. 18-23. describe what a production possibilities curve is and how it is constructed. explain what economists learn from using production possibilities curves. . 2. The Economic . Problem. Production and Growth. Define production possibility frontier. Define production efficiency. Explain how economic growth expands production possibilities. Define allocative efficiency. for the Economist. 1. 2. 1. 2. 1. 2. What Shall We Give Up?. Opportunity cost. :. . The highest valued activity sacrificed . in making a choice.. Opportunity Cost. Opportunity costs are incurred when a . Graphing the Combinations of Production for Two Goods or Services. Shows all of the possible combinations of two goods or services that can be produced within a stated time period, given two very important assumptions:. Tradeoffs in Production. The Production Possibilities Curve. Graph the following:. Televisions. Cars. 0. 16. 8. 14. 13. 10. 16. 6. 18. 2. 19. 0. Televisions. Cars. 0. 16. 19. Production Possibilities Curve. PPC. This illustrates the fundamental problem of scarcity. Since wants will always exceed available resources, people living in a given economy must make production choices. Therefore the economy must decide how many of certain items they will produce to try to maximize the return. . This curve demonstrates the tradeoff of production possibilities between two products. . Y Axis. X Axis. Production Possibilities Curve. Each point on the curve represents what is possible in the production of the two products. Notice that the curve is inverse: adding to one side means less of the other . The economic resources nations have to produce goods and services are scarce. Decision-makers face trade-offs as the result of scarcity. . The model of the production possibilities frontier is used to analyze the opportunity costs and trade-offs that individuals, firms, or countries face. . What Shall We Give Up?. Opportunity Cost. Opportunity cost. : . The highest valued activity sacrificed . in . making a choice. .. Opportunity costs are incurred when a . choice . is made.. They are subjective and vary across persons.. What Shall We Give Up?. Opportunity Cost. Opportunity cost. : . The highest valued . alternative that must be given up as a result of making . a choice. .. Opportunity costs are incurred when a . choice . This web quiz may appear as two pages on tablets and laptops.. I recommend that you view it as one page by clicking on the open book icon at the bottom of the page.. 1c – Production Possibilities. This web quiz may appear as two pages on tablets and laptops.. I recommend that you view it as one page by clicking on the open book icon at the bottom of the page.. Construct . a production possibilities curve (PPC) when given appropriate data; what is the production possibilities curve (PPC) or production possibilities frontier (PPF)?; what does it show?. Economics. THIRD EDITION. ANTHONY PATRICK. O’BRIEN. Trade-offs, Comparative Advantage, and the Market System . CHAPTER. 2. Chapter Outline . and. Learning Objectives. 2.1. Production Possibilities Frontiers and Opportunity Costs. The study of how people seek to satisfy their . needs . and . wants. by making . choices. Relationship between Economics and Scarcity. What is “Scarcity?”. What is Scarcity?”. Economic situation where there are .