Production Possibilities Curve
opportunity cost returns...
Izzy’s Bakery
Can choose to produce pastries or pizza
crust...
Pastries
Pizza Crust
0
10
1
8
2
6
3
4
4
2
5
0
12
Production Possibility Curve
11
10
9
8
Crusts
7
6
5
4
3
2
1
0
0
1
2
3
Pastries
4
5
6
12
Production Possibility Curve
11
10
9
B
8
Crusts
7
6
5
4
A
3
2
1
0
0
1
2
3
Pastries
4
5
6
12
Production Possibility Curve
11
10
9
8
Crusts
7
6
5
4
3
2
1
0
0
1
2
3
Pastries
4
5
6
Izzyland
Can choose to build schools or fighter
planes...
Schools
Fighter Planes
0
20
10
19
18
17
22
10
26
0
Draw a PPC.
What does it mean if we are somewhere on the PPC?
Draw a point which shows an underutilization of resources (label it A). What
does this mean?
Show what would happen to the PPC if more factors of production become
available (label it B). What does this mean?
Show what would happen to the PPC if fewer factors of production become
available (label it C). What does this mean?
What is the cost of producing the first 10 schools?
What is the cost of going from 10 to 18 schools?
What is the cost of going from 18 to 22 schools?
What is the cost of going from 22 to 26 schools? What do you notice about the cost of producing schools? Why do you think this happens?
35
Production Possibilities Curve
32
30
28
26
B
24
Fighter Planes
22
20
18
16
14
C
12
10
8
A
6
4
2
0
0
2
4
6
8
10
12
14
16
18
Schools
20
22
24
26
28
30
32
35