Module 3- The Production Possibilities Curve

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The Production Possibilities Curve

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Presentation transcript:

Module 3- The Production Possibilities Curve By J.A.SACCO

The PPC What is the Production Possibilities Curve? Economic model that illustrates the concept of opportunity cost and trade –offs given fixed resources (factors of production) the graph shows the various combinations of amounts of two commodities that an economy can produce it defines productive efficiency in the context of that production set

The PPC What are the two goods being produced? What is being produced at Point A? D? H? What is the opportunity cost from moving from Point A to B? Point C to F? Point E to C? Point G to B? What do you notice about the opportunity cost of the goods being produced? What does Point I illustrate? What does Point J illustrate? Can this be achieved? What is the opportunity cost of moving from Point I to D? What happens to the PPC if more resources are discovered for Luxury Cars and not Economy Cars? Why is the PPC important?

Production Possibilities Curve (PPC) A 140 . B 120 J C 100 . D Economy Cars 80 I E 60 F 40 G 20 H 20 40 60 80 100 120 140 Luxury Cars