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LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-1 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY.

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Presentation on theme: "LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-1 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY."— Presentation transcript:

1 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-1 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

2 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-2 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY PART 1 – CONSTANT OPPORTUNITY COSTS

3 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-3 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Technologia Imagine you are a citizen of Technologia, a country that produces two goods: –Smartphones –Tablet computers What do these two goods have in common? –Both digital technology –Both wireless –Both have touch screens

4 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-4 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Coltan Coltan is a heat-resistant ore that can hold a strong electrical charge and is used in making the capacitors needed to produce touch screens for both smartphones and tablet computers. Coltan is rare. Almost all the deposits are found in African countries such as the Democratic Republic of Congo. –Source: University of Waterloo Earth Sciences Museum (http://www.uwaterloo.ca/earth- sciences-museum)

5 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-5 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY COLTAN: BLESSING OR CURSE? https://www.globalpolicy.org/the-dark-side-of-natural-resources-st/water-in- conflict/40150.html

6 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-6 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Technologia’s PPF Simulation of smartphone/tablet production Five students per team; each person can handle only one card at a time. –Pull card from “coltan” box. –Turn card to appropriate side. –Pass to next person. –Place in box with appropriate label. –Repeat until coltan runs out.

7 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-7 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Technologia’s PPF Simulation

8 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-8 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Technologia’s PPF Simulation First person pulls a card and turns it to “Tablet”

9 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-9 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Technologia’s PPF Simulation Passes the card down the line …

10 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-10 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY TABLE 1.1: Smartphone and Tablet Computer Production Possibilities Round (point) Number of smartphones Number of tablet computers 1 (A) 2 (B) 3 (C) 4 (D) 5 (E) 6 (F)

11 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-11 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY What is the maximum number of tablets Technologia can produce? –20 Plot the results if Technologia had produced only tablets. What is the maximum number of smartphones Technologia could produce? –20 Plot the results if Technologia had decided to produce only smartphones. Connect the points you have graphed.

12 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-12 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Technologia’s PPF Tablets Smartphones

13 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-13 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

14 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-14 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY OPPORTUNITY COST Definition = the cost of the next best alternative Opportunity cost for production in Technologia: –1 smartphone = 1 tablet –1 tablet = 1 smartphone

15 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-15 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Technologia’s PPF Tablets Smartphones

16 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-16 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY AN OUTWARD SHIFT IN THE PPF What changes may cause Technologia’s PPF to shift outward, representing growth in the economy? –increase in resources, increase in productivity, increase in technology If I add 10 more coltan cards to the box, what does this represent? –increase in resources

17 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-17 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY What is the maximum number of tablets Technologia could produce? –30 What is the maximum number of smartphones Technologia could produce? –30

18 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-18 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Technologia’s PPF Increase in the amount of coltan available for production PPF shifts “out,” away from the origin Smartphones Tablets

19 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-19 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY What would happen if production technology improved to the point where touch screens on smartphones required only half the coltan they did before? Add this new PPF on your graph. What has happened to the opportunity cost of a tablet?

20 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-20 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Technologia’s PPF Increase in productivity for smartphones One unit of coltan can produce two smartphones PPF has shifted outward, away from origin Smartphones Tablets

21 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-21 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY DEBRIEFING QUESTIONS Why do countries face a trade-off between goods such as tablets and smartphones? In the first PPF graph, what was the opportunity cost of a smartphone? In the first PPF graph, did the opportunity cost of a smartphone change? Why or why not? What can cause the PPF to shift outward?

22 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-22 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY PART 2 – INCREASING OPPORTUNITY COSTS

23 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-23 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

24 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-24 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

25 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-25 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

26 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-26 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY DEBRIEFING QUESTIONS How does the PPF from the coltan example compare to the PPF from the protractors and rulers? Why did the opportunity cost increase? How does this relate to real-world production possibilities?

27 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-27 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

28 LESSON 1 PRODUCTION POSSIBILITIES AND OPPORTUNITY COST 1-28 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY VIDEO TUTORIAL RESOURCES YouTube: mjmfoodie YouTube: ACDC Economics YouTube: Welker’s Wikinomics YouTube: Crash Course Economics Khan Academy

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