2. The production possibilities frontier illustrates concepts of : Scarcity - resources are limited. Choice - choices in the production of different goods need to be made. Opportunity cost - to gain more of a good, something else must be given up.

3. THE PRODUCT İ ON POSS İ B İ L İ T İ ES FRONT İ ER shows the maximum amount of any two products that can be produced at a given time from a fixed quantity of resources. Different Combina tions BroccoliPizza 60100 5580 41060 31540 220 1250

4. Different Combinations BroccoliDiffPizzaDiffOpp cost Pizza Opp cost Broccoli abcdefg 60100 51095 41685 32070 22340 1250

5. Different Combinations BroccoliDiffPizzaDiffOpp cost Pizza Opp cost Broccoli abcdef = c/eg = e/c 60-100--- 510 95520.5 416685100.61.667 320470150.26673.75 223340300.110 12520400.0520 specialization is bad The takeaway from this table is that specialization is bad, because the opportunity costs are rising as we specialize. Slope of the curve = opportunity cost

6. Characteristics of the Production Possibilities Frontier (Summary) along 1. Points along the frontier show the trade off between two different goods for society; to get more of one, we must give up some of the other (A, B and C ). outside 2. Points outside the curve are unobtainable with given resources and technology (Point Y ). inside 3. Points inside the frontier are attainable, but do not utilize society's resources efficiently (Point X).

7. Ideas Illustrated by the Production Possibilities Frontier: Efficiency - inside vs. on the frontier Tradeoffs - movement along the frontier Opportunity Cost - slope of the frontier Economic Growth - changing position of the frontier