Warm Up (FINISH and TURN in your project) What are two characteristics of a market economy? Give an example of one country that has a Market economy? Give an example of a traditional economic system? Opinion: List everything you can think of that a tree could be used for.

Production Possibilities Curve Economics Standard 12.11.2 Learning Goal: I will analyze the production possibilities curve by reading the graphs.

PPC Houses vs. Food

PPC for similar products

I. Assumptions Any economy is not equally made to produce two different types of goods (ex. houses vs. food) Resources cannot be changed and are used to their maximum Technology is unchanged

II. Opportunity Cost A. As more resources are devoted to producing food the opportunity cost as measured in houses will increase

PPC Food vs. Computers

III. Margin A. This graph allows an economist to “think at the margin” and study the possible production choices

PPC Grain vs. Wine

Production possibilities curve Computers (mill.) Computers (mill.) Attainable and unattainable production combinations Possible combinations of computers and VCRs A A Production possibilities curve (PPC) B Production possibilities curve (PPC) B F unattainable Points along PPC imply no unemployed resources and efficient production C C Foregone output E D inefficient D

Economic growth E F G C PPC0 PPC1 Computers (mill.) Economic growth is illustrated by an outward shift in a nation’s PPC F G C PPC0 PPC1

PPC Video Notes Scarcity (tradeoffs) - Law of Increasing Opportunity Cost A Perfectly Efficient Economy produces on the curve instead of inside it Economic Growth means pushing the frontier outward

Free Response Question Directions: Answer the following question in a short response. The world is full of different types of economies. Identify and explain characteristics of three different types of economies. Explain both the advantages and disadvantages of each. Provide at least two examples for each economy.

PPC for similar products

Law of increasing opportunity cost Computers (mill.) A A bowed outward PPC illustrates increasing opportunity costs B C D