+ Production Possibilities Curve Students will understand how PPC graphically illustrates:...
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![Page 1: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/1.jpg)
+
Production Possibilities CurveStudents will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth
ES: C-5 Demonstrate understanding of concepts
![Page 2: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/2.jpg)
+The Model
![Page 3: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/3.jpg)
+Assumptions of the Model
These assumptions enforce ***CETERIS PARIBUS***1. “All things being equal”2. Allows us to isolate and analyze the relationship between 2
variables because all other variables are held constant
![Page 4: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/4.jpg)
+Illustrates ALL Potential Trade-Offs
The United State’s production (of their simplified 2 good economy) capabilities are illustrated below
![Page 5: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/5.jpg)
+ALONG (or on) the Curve
ANY point along the curve is feasible and fully utilizing ALL available resources (land, labor, capital)
![Page 6: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/6.jpg)
+UNDER or BEYOND the Curve
UNDER the curve is attainable by the modeled economy—but not efficient. Unemployment, idle
resources*
BEYOND the curve is unattainable with current resources.
![Page 7: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/7.jpg)
+Idle Resources*
So, being under the curve has no opportunity cost!
![Page 8: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/8.jpg)
+Illustration of Opportunity Cost
The calculation:
![Page 9: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/9.jpg)
+Illustration of Opportunity Cost II.
![Page 10: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/10.jpg)
+Example:
Use the following PPC to calculate the opportunity cost of shirts.
![Page 11: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/11.jpg)
+Constant Opportunity Cost
Curve is a straight line…constant slope.
![Page 12: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/12.jpg)
+Increasing Opportunity Cost When the slope changes…negative increasing curves.
This implies that resources are not equally adaptable to all uses.
Example: Steel in Automobiles vs. Tanks curve
![Page 13: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/13.jpg)
+Law of Increasing Opportunity Cost
The more an economy polarized production the greater greater cost, in terms of production, it will have to produce (opportunity costs are increasing = slope increasing!!!). Why the curve bows
An economy is giving up more of good 2 to produce more of good 1 This is because of the fact that resources are frequently
specialized
![Page 14: + Production Possibilities Curve Students will understand how PPC graphically illustrates: Opportunity Cost, trade-offs, efficiency, and growth ES: C-5.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649db45503460f94aa42a6/html5/thumbnails/14.jpg)
+Economic Growth Illustrated both in overall performance, or by sector.
Overall = both intercepts increase Sector = one variable of production increases, one intercept
increaseResult from new technology, improved labor, or more capital