Essential Skill: Explicitly assess information and draw conclusions. PPC and Circular Flow Essential Skill: Explicitly assess information and draw conclusions.

Take out PPF Packet Pick a partner and review your answers in 5-6 minutes Use this time to discuss the questions you did not understand and start to gather specific questions

Fish and Fruit PPC Fish 12 10 8 6 4 2 Fruit 5 10 15 20 30 25

Combinations 9 fish and 13 fruit 10 fish and 13 fruit Attainable Unattainable Attainable

Maximum Efficiency 11 fish and 0 fruit Efficient 10 fish and 7 fruit NOT Efficient

Movies and Books PPC Movies What is the opportunity cost to moving from point A to point B? What is the opportunity cost of moving from point C to point B? What does point Z represent? 1000 800 A 600 B 400 C 200 Z D 200 400 600 800 1000 Books (per month)

Production Possibilities Curve: Capital Goods and Consumer Goods Suppose a new government comes into power and forbids the use of automated machinery and modern production techniques in all industries. Which curve in the diagram would represent the new production possibilities curve? Suppose massive new sources of oil and coal are found within the economy, and there are major technological innovations in both industries. Which curve in the diagram would represent the new production possibilities curve? Suppose there is a major technological breakthrough in the consumer-goods industry, and the new technology is widely adopted. Which curve in the diagram would represent the new production possibilities curve? c

Shifts along the Curve What would cause the production possibilities curve to shift from the original curve (XX’) to the new curve (YY’)? Why might a government implement policy to move the economy from Point B to Point A?

Baseball Village Shows the maximum amount of bats and peanuts Baseball Village can produce when using their resources efficiently Under the curve Outside of the curve On the curve Larger curve Showing an expanse in the use of resources; something that will allow you to produce more of 1, or both, desired goods Technology is Improved More Resources (CELL) Economic institutions get better at fulfilling our wants

Cookies, iPhones, and iPads

4 Assumptions of the Model Full Employment Fixed Resources Fixed Technology Two Goods

Constant v. Increasing OPP Cost Model-Not What is Common in the Real World

Increasing Opportunity Cost

Shifts in the Production Possibility Curve Neutral Technological Change Butter C D A B Guns

Shifts in the Production Possibility Curve Biased Technological Change Butter C B A Guns

Review 1) Which of the following would not shift an economy's PPC?       a) An increase in population.       b) Doubling the amount of capital in the economy.       c) An increase in the money supply.        d) A technological advance. 2) Efficiency along the PPC implies,       a) Goods are produced quickly.       b) The state of technology is maximized.       c) In order to get more of a good, some of another must be given up.        d) Goods are distributed equitably.

Review 3) A PPC shows,       a) The best combination of goods to produce.       b) The plans for increasing output in the short run.       c) What can be produced with various combinations of resources.        d) Resources are constrained by choices. 4) An economy has a constant cost PPC. What do you know about the slope?       a) A straight line.       b) Bowed in.       c) Bowed out.       d) Convex to origin.

Review 5) What determines the opportunity cost along a PPC?       a) The kinds of goods being produced.       b) The slope of the PPC.        c) Choices made by the economy.       d) The area under the PPC. 6) Which of the following are assumptions underlying the PPC?       a) Only two goods are produced.        b) Technology, population, and capital are variable.       c) Prices determine the position on the PPC.       d) All the above. 7) What statement below implies that a PPC will be an increasing cost curve?       a) Resources are scarce.       b) Most resources are more productive in certain uses than others.        c) Underemployment of productive resources.       d) Diminishing marginal returns to scale.

Circular Flow Diagram Create a circular flow diagram using the terms listed on the sheet Include the * items as the four main players in the economy. Start by drawing pictures that symbolize the * items, and then label them. Connect the main players to one another with arrows going both directions. Use all the other items listed below to label those arrows that connect the main players to one another.

Resources Factor Market Taxes Households Firm Gov’t Taxes Household Income Factor Payment Resources Factor Market Capital, Entrepreneurship, Land, Labor Taxes Purchase of goods/services Household income, interest Households Firm Taxes Gov’t Product Market Goods and Services Goods and Services Purchases Revenue

where in the circular flow does the transaction take place? factor market product market

Christian buys a new Blu-Ray player at a local store.

Alexandra earns $8 per hour working a summer job at the spring factory.

Evan earns $25,000 in revenue from his ownership in a bike shop.

Ariana makes Christmas ornaments to sell at a local flea market.

JessicaCorp builds a new factory and hires 1,500 new workers.