Economics Production Possibilities Curves (PPC)

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Presentation transcript:

Economics Production Possibilities Curves (PPC) Also known as Production Possibilities Frontiers. Please follow my store for the latest products & freebies. Main Aim: Students will fully understand how to analyse and draw production Possibilities curves.

Grades in Economics & Another Subject Think of another subject you take alongside economics and fill in the predicted grades below if you carried out the following revision for each: Percentage of Revision for each subject Economics Grade Other Subject Grade: __________________ 100% effort in economics; 0% effort in other subject A F 75% effort in economics; 25% effort in other subject 50% effort in economics; 50% effort in other subject 25% effort in economics; 75% effort in other subject 0% effort in economics; 100% effort in other subject

Grades in Economics & Another Subject Think of another subject you take alongside economics and fill in the predicted grades below if you carried out the following revision for each: Percentage of Revision for each subject Economics Grade Other Subject Grade: __________________ 100% effort in economics; 0% effort in other subject A F 75% effort in economics; 25% effort in other subject B D 50% effort in economics; 50% effort in other subject C 25% effort in economics; 75% effort in other subject 0% effort in economics; 100% effort in other subject

Production Possibilities Curve A production possibilities curve shows different possible combinations of two goods that can be produced using available resources.

What concept do PPCs illustrate? opportunity cost: the value of your second best option, what was given up

Production Possibilities Scenario Let’s look at two goods and use them in a production possibilities curve. Computers Food

Production Possibilities Curve for Food & Computers The move from point A to point B indicates an increase in the number of computers produced, but it also indicates a decrease in the amount of food produced.

Production Possibilities Curve for Food & Computers Assuming that factors of production not increase, making more computers requires that resources be redirected from making food to making computers.

Production Possibilities Curve for Food & Computers All points on the curve are points of maximum productive efficiency.

Production Possibilities Curve for Food & Computers All points inside the curve are feasible, but inefficient.

Production Possibilities Curve for Food & Computers All points outside the curve are infeasible for given resources.

Economic Growth Economic growth means an economy has increased its production potential. This is shown by a shift to the right in the PPC graph.

Mailboxes Vs Cars PPC Mailboxes 5000 4000 3000 2000 1000 Cars 1000 1000 2000 3000 4000 5000 6000