1. Standard 1 Understand the fundamental concepts relevant to the development of a market economy SS.912.E.1.2 Analyze production possibilities curves to explain choice, scarcity, and opportunity costs

2. Definitions:
Scarcity- less of a good or service than people would like to have
Opportunity cost- value of next-best alternative not chosen

3. Video: Cast Away-specialization

4. PPC also called PP Frontier
Graph:

5. A single point is either inefficient, efficient, or not attainable (given current resources)

6. When constructing a PPC, all factors of production are held constant
When factors change, PPC shifts
More or better factors- shift right
Less or worse factors- shift left

7. Exercise: Name one thing that would allow Tom Hanks to produce more fire, one thing to produce more food, and one thing to produce more food AND fire simultaneously. Draw three separate PPCs to illustrate.

8. Graphs:

9. Video: A Knight’s Tale

10. Most PPCs are “bowed out”
Increasing opportunity costs occur because resources being pulled from other uses are not as productive in their new uses