1. Production Possibilities
2.2

2. I. Efficiency & Production Possibilities
Simplifying Assumptions (p.42)
Two broad classes of products
Given time period (year)
Resources are fixed
No new advances (in that time period)
PPF—Production Possibilities Curve=PPC

3. PPC
Shows all the combinations of goods/services that can be produced from a fixed amount of resources in a given period of time
This graph can apply to any resource. The two broad classes are capital : consumer

6. II. Shifts of the PPC Resource Availability Increase PPC shifts
Decrease PPC shifts
OUT IN

7. II. Shifts of the PPC B. Capital good efficiency
Increase this year’s capital goods
increase next year’s production (shift OUT)
Failure to maintain capital goods
decrease next year’s production (shift IN)
C. Changes in Technology

8. PPC and Opportunity Costs
Mr. Fendrych
Let this teacher review with you for 5:49 minutes.
There will be a quiz tomorrow 