2. Lesson Objectives: By the end of this lesson you will be able to: *Interpret a production possibilities curve. *Explain how production possibilities curves show efficiency, growth, and cost. *Explain why a country’s production possibilities depend on its resources and technology.

3. Economics and You Community breakfast fundraiser Example Principles in Action- To decide what and how much to produce, economists use a tool known as a production possibilities curve. Production Possibilities A production possibilities curve is a graph that shows alternative ways to use an economy’s productive resources. PPC Video

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5. Production Possibilities Curve Production Possibilities frontier-Line of plotted points on the graph that shows combinations of the production of both items/service. Any spot on the line represents a point at which all resource are being used to produce a maximum combination of those two products. Efficiency, Growth, and cost Production Possibilities curves can show: *How efficient an economy is *Whether an economy is growing *Opportunity cost of producing more of one good or service

6. Efficiency - Using resources in the best way to maximize the output of goods and services - producing along the Production Possibilities Curve line. The opposite of efficiency is underutilization (use of fewer resource than the economy is capable of using). Growth -When a country’s production capacity increases The Production Possibilities curve will shift to the right Cost -The Production Possibilities Curve shows the “opportunity cost” of producing more or less of each item. The Law of Increasing Costs- As production shifts from making one item to another, more and more resources are necessary to increase production of the second item. Therefore, the opportunity cost increases.

7. Technology & Education Technology is the process used to create goods and services. At any time, countries have used different forms of technology to produce products. Technology is one of the factors that can increase a nation’s efficiency. Therefore, many governments spend money investing in new technology. For the same reason, they may also invest in education and training so that its people can develop and use new technologies. Highly-skilled workers can increase efficiency and lead to economic growth.