1. Econ “Analyzing Production Possibilities”
Unit 1, Chapter 1, Section 3

2. Objectives
describe what a production possibilities curve is and how it is constructed
explain what economists learn from using production possibilities curves
analyze how production possibilities curves show economic growth

3. Graphing the Possibilities
Key Concepts: a production possibilities curve (PPC) is an economic model or graph that illustrates the impact of scarcity on an economy by showing the maximum number of goods or services that can be produced using limited resources

4. Production Possibilities Curve

5. What We Learn from PPCs
Key Concepts: the simplified model spotlights concepts that work in the real world of scarce resources
Example-Efficiency: producing the maximum amount of goods and services; Underutilization: not using economic resources to their full potential
Example-law of increasing opportunity costs: as production switches, resources are needed to increase production of second product

6. Efficiency v. Underutilization

7. Changing Production Possibilities
A Shift in the PPC: new resources or the more efficient use of resources is needed

8. Shift in the PPC