1.3 Production Possibilities Curve

Explain why the Law of increasing Opportunity works

As you produce more of any good, the opportunity cost will increase. (Result is a curved/bowed out line on the graph) Straight line: corn and wheat Bowed out line: Chicken nuggets and books.

Identify the 3 shifters of the PPC

Change in RESOURCES quantity or quality Change in TECHNOLOGY Change in TRADE

Give 2 specific scenarios that would shift a PPC outward (Use Pizza and Robots)

Increase in population or increase in resources

Differentiate between increasing and constant opportunity cost PPCs.

Law of Increasing Opportunity --> As you produce more of any good, the opportunity cost (foregone production of another good) will increase. Constant Opportunity cost --> Resources are easily adaptable for producing either good (straight line).

Explain the difference between productive and allocative efficiency on the PPC

Productive --> Products are being produced in a costly manner. Any point ON THE PPC Allocative --> The products being produced are the most desired by society.

Explain how you would use the concept of opportunity cost in everyday life?

You would use it in everyday life when you make the simple choice between waking up for school or staying in bed asleep. The opportunity cost would be your "most valued" trade-off.