1. Standard  SSEF2a- Illustrate the production possibility curve  SSEF2b-Marginal Cost v. Marginal Benefit = Rational Decision Making

2. Marginal Cost v. Marginal Benefit  Marginal Cost- Anything negative about an alternative/cons  Marginal Benefit – Anything positive about an alternative/pros

3. Marginal Cost v. Marginal Benefit  People make decisions based on costs and benefits.  The benefits must always outweigh the costs.  When rational decisions occur, marginal benefit outweighs marginal cost. ******

4. Production Possibility Curves (PPC)  The Curve illustrates opportunity cost  It graphically depicts the trade-offs we make

5. Production Possibility Curve  *Measures the maximum amount of output that can be achieved from any given input.  Output- the result of an activity  Input- what you put in to receive an output

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7. Production Possibility Curves  Any point ON or INSIDE the curve is a possible production combination

8. Fully Employed Resources  All points on the curve represent the maximum combinations of output is all resources are fully employed

9. Production Possibility Curves  As long as some resources are idle, the country cannot produce to its full potential. This is represented by points inside the curve.

10. Moving the Curve  You can move the curve outward when output increases  Ways to increase output: 1. New technology 2. More resources

11. Figuring out Opportunity Cost  What you could have produced vs. what you are producing now  It’s what you give up to produce more of a given product.

12. Figuring out Opportunity Cost If this economy decides to increase production of GUNS from 30 to 60, what is the opportunity cost in terms of BUTTER?

13. PPC  1. What do points A,B, and E represent?  2. What does point C represent?  3. Can I produce at point D?  4. What is my opportunity cost if I produce at point A instead of point E ?