1. Production possibilities curve
An introduction

2. Abstractions and Assumptions of a PPC
Compare 2 variables; goods or services
Trade-offs or opportunity cost involved
All available resources are fully employed
All available technology is fully employed
Productive efficiency: Resources are employed in the least costly way

3. What type of curve illustrates the label below?
Increasing opportunity cost
per unit of good B
Good B
Good A

4. What type of curve illustrates the label below?
Increasing opportunity cost
per unit of good B
Good B
Good A

5. What type of curve illustrates the label below?
Zero opportunity cost
per unit of good B
Good B
Good A

6. What type of curve illustrates the label below?
Zero opportunity cost
per unit of good B
improbable
Good B
Good A

7. What type of curve illustrates the label below?
Constant opportunity cost
per unit of good B
Good B
Good A

8. What type of curve illustrates the label below?
Constant opportunity cost
per unit of good B
Good B
Good A

9. What type of curve illustrates the label below?
Decreasing opportunity cost
per unit of good B
Good B
Good A

10. What type of curve illustrates the label below?
Decreasing opportunity cost
per unit of good B
Impossible; not supported by economic theory
Good B
Good A

11. What trade-offs are involved? Why is the PPC concave?
What does point (E), inside the PPC illustrate?
What is the significance of point (F), outside the PPC?
Under what conditions can point F be reached? A 12 B F 10 8
army trucks 6 C 4 E 2 D 1 2 3
cars

12. H F G A
Moving from point B to point A, could eventually expand the frontier from G,G to H,H B
capital goods C E D H G
consumer goods