1. You want to start a business.
Warm-Up
You want to start a business.
What good or service would you provide. (Keep it to something you can discuss with Grandma)
How would you produce it?
How would you determine who would need it?

2. What is a production possibility curve?
Learning Goal Today
What is a production possibility curve?

3. Production Possibilities Curve

4. Production Possibility Curve
A curve showing the rates of two goods or services an economy can produce efficiently in a given period of time.

5. How it Works

7. What Happens with A Country

8. Curves Can Shift Right or Left
An outward shift of the frontier might be due to:
• more training of employees, enabling them to be more productive;
• greater investment in capital goods such as machines and equipment—in the short run
this would mean that resources would have to be shifted from consumption goods
toward capital goods, and in the long run greater investment would enable the economy
to produce more products for consumption;
• an increase in the population size, for example, through immigration;
• improvements in technology providing better ways of doing things.

9. Shift Inward: Change if factors of production Natural Disaster
Labor Shortage
Resources Scarce
Expensive

10. Comparative Advantage
Concept in economics that a country should specialize in producing and exporting only those goods and services which it can produce more efficiently (at lower opportunity cost) than other goods and services (which it should import).

11. Absolute Advantage
Entities with absolute advantages can produce something using a smaller number of inputs than another party producing the same product

12. Answering The Basic Economic Questions
What to produce?
How to produce it?
For whom to produce it for?

13. What To Produce Basic Needs- Food, Clothing, Shelter
Wants (Luxury Items)
Services- Education, Health Care, Public Safety

14. How to Produce It Size, Organization, and Facilities Resources
Time and Effort

15. Who?
Choices
Value
Access to goods or service

16. Economic Systems
Each Economic System Answers the Basic Economic Questions:
What to Produce
How to Produce it
To whom to Produce it For

17. Types of Economic Systems
Traditional
Command
Market
Mixed

18. Traditional
Local
Handed down from parent to child
Example: Fishing

19. Command
Government controls/owns all factors of production and answers all economic questions.
Government decides who will make and what is made
Example: North Korea

20. Market System
Consumer answers the economic questions by purchasing goods or services they want or need.
Example: United States

21. Mixed System The government has some control over the resources.
They may own the utilities or natural resources or regulate what may be produced.
Example: England and Sweden