1. Production Possibilities Frontier
AP Econ

2. PPF: various combos of goods/services an economy can produce when all resources are fully employed
Shift production from A to B: the opportunity cost of producing 25 more units of butter = 20 guns
100 80 40
Guns
Butter

3. What is going on at point X?
How can this economy reach production at point Y?
100 80 40
Guns
Butter

4. PPF can shift outward by:
Increasing Factors of Production: the resources used to produce goods and services
Ex. Sewing machines when making clothing, better education
Progress in Technology
Ex. The invention of the train
Discovery of New Resources
PPF can shift inward due to destruction of capital equipment
Ex. A war that ruins infrastructure

5. With a partner sitting near you: For each scenario, draw a PPF graph that represents America, with consumer goods on the x-axis and capital goods on the y-axis. Then add a new curve or use/add specific points on the graph to illustrate each scenario.
War has broken out between America and Canada.
The nation plans to invest in technological research for automobile plant machinery.
The nation has been subsidizing college and vocational education.
A plague has wiped out ¼ of the population.
A nationwide teacher strike.

6. HW #1 Packet Due Aug 23rd Read Ch 1 &2 P
HW #1 Packet Due Aug 23rd Read Ch 1 &2 P Basic Concepts Test Aug 24th