PPC Part 2

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I can define: Production Possibilities Curve, Efficient, Growth,
Inefficient

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I can illustrate: a point on a PPC, growth on a ppc.

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I can explain how a PPC shows opportunity cost.

Learning Targets

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A curve that shows the opportunity cost between two things you can produce.

Production Possibilities Curve

To make a PPC:

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Determine your most likely production options.

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Determine how much you can make of each if you just focused on one product at a time.

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Plot your maximums.

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Connect your maximums with a curve.

Production Possibilities Curve

Draw this on your note paper:

We are going to make a PPC for
Dairy Queen.

Production Possibilities Curve

The curve represents all the places
you can possibly produce.

A point on the curverepresents where
you choose to produce at any given
moment.

Production Possibilities Curve

PPCs show that if you want to make
more of one product, you have to give
up some of another.

If we want to make more blizzards,
what is our opportunity cost?

Production Possibilities Curve

Point location:

The restaurant is closed.

The restaurant is making hamburgers
only.

The restaurant is splitting between
both products.

The restaurant is making mostly
blizzards.

Production Possibilities Curve

The curve represents all the places
you can possibly produce.

A point on the curve represents
where you are choosing to produce
at any given moment.

Any point on the curve is efficient.

Any point inside the curve is
inefficent.

Production Possibilities Curve

What if we improved our technology
or training?

Now we get a new maximum.

That’s growth.

Production Possibilities Curve

Growth on a PPC is caused by:

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More resources (capital goods)

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Improved technology

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Improved worker training

Production Possibilities Curve

I can define: Production Possibilities Curve, Efficient, Growth, Inefficient

I can illustrate: a point on a PPC, growth on a ppc.

I can explain how a PPC shows opportunity cost.

Learning Targets