1. Opportunity Cost and The PPF
HFAX - Fall

2. Aim:
How does opportunity cost influence the PPF?

3. I. Opportunity Cost and The PPF
PPF demonstrates opportunity cost.
To increase product x we must give up product y.
B. Opportunity cost is expressed as a ratio:
What you give up
Opportunity Cost = ______________
What you select

4. II. Ingredients for Growth
The following must happen in order for the PPF curve to reach an “unattainable” point.
Development of new technology
More efficient labor
Discovery of new resources
Specialization of production

5. PPF Practice Possibility I-Pods Computers A 40 140 B 60 120 C 80 100 D
1. Construct a PPF Curve.
2. Calculate the Opportunity Cost of I-Pods and Computers.

6. Calculate Opportunity Cost and Construct a PPF
Possibility
Shirts
Pants A 20
160 B 40
140 C 60 80 D
Coffee
Tea 5
190 15 30
100 50 10