1. Opportunity Cost and Production Possibilities Frontier
Unit 1 Section 2

2. I can Interpret production possibilities frontiers
define and create an examples of opportunity cost

3. What is opportunity cost?
Is the cost of the next best alternative use of money, time or resources when one choice is made rather than another
Would you rather buy an iPhone or Android?
Would you rather go to college or work full time?
Would you rather make brownies or cookies with your last cup of sugar?

4. The Trade-Off
The trade off is the alternative that must be given up when one choice was made.
What phone did you chose?
The next best thing was your opportunity cost

5. Simplified equation, graphic, or figure showing how something works.
Economic model
Simplified equation, graphic, or figure showing how something works.

6. Production Possibilities Frontier
To illustrate opportunity cost, economists use the production possibilities frontier or PPF.

7. How the PPF changes Producers are idle Less workers No resources
Productivity goes down
Productivity goes up
Producers are idle
Less workers
No resources
Factories increase production
More workers
More resources

8. Changes in the PPF
Productivity goes down
Productivity goes up

9. Cost Benefit Analysis
A way of comparing the cost and the benefits of an action to the benefits received.

10. Free enterprise economy
One in which consumers and privately owned business, rather than the government, make the majority of the what, how, and for whom decisions.

11. Wrap Up What are some things that can make a PPF shift?
Give me examples of opportunity cost and the trade off ?